In its concerted effort to augment its presence in Canada, WPP plc (WPPGY - Analyst Report) recently acquired john st. – one of the leading creative agencies in the country – for an undisclosed amount.
Since its inception in 2001, john st. has carved a niche for itself in the market as a premier creative agency in Canada with an expertise in advertising, digital services, strategic planning, integrated production, and account management services. Based in Toronto, the company employs about 100 people with revenues of approximately $14.0 million in 2012.
The acquisition would enable WPP to boost its presence in specialized services such as media, direct and public relations. The acquiree provides a comprehensive range of social media services including social media strategy development, creative frameworks, community management, content creation, social application design and development, monitoring and analytics.
The company also has a dedicated team of digital service professionals comprising information architects, web designers, developers, producers and project managers. Consequently, the acquisition is likely to offer unrivalled advantage to WPP to consolidate its footprint in Canada.
On the other hand, with WPP on board, john st. will strive to be one of the most innovative creative agencies in the world. Through its operating companies, WPP offers a host of advertising and marketing services including advertising & media investment management; consumer insight; public relations and public affairs; direct and digital promotion and relationship marketing. The transaction, therefore, is a win-win deal for both the participating companies.
Going forward, WPP expects to continue its acquisition binge to spread its wings across the globe. In 2013, the company anticipates a like-for-like revenue and gross margin growth of around 3% and operating margin improvement of 0.5 margin points, with a primary focus on revenue and gross margin growth at a faster rate than the industry average. The company expects to achieve it by its market-leading position in the new markets, in new media, and in consumer insight.
At the same time, WPP should also remain wary of tough competition from other players in the market such as Clear Channel Outdoor Holdings Inc. (CCO - Snapshot Report), Publicis Groupe SA (PUBGY), and AirMedia Group Inc. (AMCN). WPP currently has a Zacks Rank #3 (Hold).