Ad holding companies are stepping up their shopping spree in a hot sector of China’s ad industry–independent digital agencies–with WPP’s acquisition today of IM2.0. The deal by Young & Rubicam’s VML to enter China is the Kansas City-based digital agency’s biggest acquisition to date, said Jon Cook, VML’s global CEO and president.
Mr. Cook said the company looked at 10 Chinese agencies over three years. Finding the right match was key, especially given how “complex, or nearly impossible” it is for foreign brands to understand China’s digital environment, he said in a phone call from Beijing.
VML already has an Asia presence in Singapore, Japan, India and Indonesia but took its time exploring possibilities in China, where local digital agencies have the advantage navigating the many homegrown platforms that have flourished as the government blocks Twitter, Facebook and YouTube. There’s also the language barrier, not to mention the importance of local connections, or “guanxi.” Local digital agencies’ expertise has made them prime M&A targets.