WPP's GroupM has announced a partial reorganization, combining global media agencies Maxus and MEC and establishing digital agency Essence as a new fourth pillar for GroupM. Both are notable to the extent that they represent the need for scale to drive ongoing margin improvements and the need for differentiation to drive longer-term organic revenue growth. Overall, the news is neutral for WPP stock vs. prior expectations, but ongoing developments in media agencies remain as important ones for investors to monitor given the critical nature of media agencies to their holding company parents. We continue to rate WPP Hold with a 1780 YE2017 price target.
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