WPP acquires CMI, retains minority stake in Compas
CMI/Compas created a dashboard called Its By Doctor.
WPP's acquisition of CMI, a significant player in the healthcare media-planning space, will likely bolster the services and expertise it provides to pharmaceutical clients.
The deal had been expected for some time, according to an unnamed source. In fact, WPP has since 2005 owned a minority stake in Compas, the media buying firm that CMI founder and CEO Stan Woodland spun off from CMI in the early 1990s. The acquisition of CMI, which closed March 22, does not affect WPP's stake in Compas.
“There are a lot of synergies and a lot of opportunities to add resources and add capabilities, versus buying them or building them,” Woodland said.
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The holding company plans to merge Ogilvy CommonHealth Medical Media into CMI, which will continue to be led by Woodland. No layoffs are expected at the Ogilvy business, which employs about 20 people. Financial terms of the deal were not disclosed.
CMI generated $38 million in revenue in 2015. It employs 210 people and has offices in King of Prussia, Pennsylvania, as well as New York, Philadelphia, and Pennsauken, New Jersey. (CMI/Compas brought in a combined $50 million in revenue in fiscal 2014, up 20% from 2013.)
“I don't think there's ever been such scrutiny on the clients' marketing dollars,” said John Zweig, chairman of WPP's healthcare and specialist communications group. “To be able to provide the kind of data and demonstrate the sort of return on investment by medium and by audience with the specificity that CMI [does], that's a big part of what makes CMI indispensable.”
Holding companies like WPP are making acquisitions for two reasons right now: To gain exposure to expertise like digital competencies or consulting services, or to address a specific client need, according to Brian Wieser, Pivotal's senior analyst. WPP's Sudler & Hennessey in December announced that it had acquired a majority stake in System Analytic, a key-opinion-leader engagement company.
But there are also broader changes underway in the media sector and in the pharmaceutical industry, both of which are rapidly consolidating. In WPP's 2014 annual report, the company had anticipated consolidation in the fast-moving consumer goods and pharmaceutical industries in 2015 as a key trend for the year.
“It does perhaps signal the end of one era and the beginning of another,” Kenneth Karpay, managing director of healthcare media at DeSilva & Phillips, said in an email. “There's been an ongoing transfer and consolidation of traditional media to fewer hands and a continuing shift to other venues for brands to effectively communicate about their drugs.”
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In 2012, CMI started to work with drugmakers to co-promote their brands, creating a program that compensates the firm based on its ability to grow the brand's market share and boost prescriptions.
“When you're no longer having a discussion about reach and frequency, you're having a discussion around growing businesses,” Woodland said. “That's a very different type of partnership than your typical agency/media partner.”
CMI/Compas has worked with Biogen, Novartis, and Otsuka.
Correction: An earlier version of this story incorrectly cited two dates. WPP acquired Grey in 2005, not 2004, and CMI started working with drugmakers to co-promote their brands in 2012, not 2014. In addition, Ogilvy CommonHealth Medical Media is part of Ogilvy Commonhealth Worldwide, not GroupM.