Droga5's deal with WME could go one of two ways

By Danny Rogers, campaignlive.co.uk, Thursday, 18 July 2013 08:00AM

Certain news stories mark seismic shifts in advertising. They are not only genuinely interruptive, but encapsulate the direction of travel. However, sometimes it takes a while to determine what they truly signify.

Droga5's deal with WME could go one of two ways

Last week, the Hollywood talent agency William Morris Endeavor bought a 49 per cent stake in one of the world’s most lauded ad agencies, Droga5. It is a deal that Campaign has been following since May, but the story broke last Thursday as the ink was finally drying.

It is an intriguing alliance not just because of the huge potential therein, but because of the substantial doubt over whether it can work.

Since the millennium, media and marketing commentators have seen brands’ ability to weave their messages into the very fabric of entertainment as the holy grail. And consumers’ tendency to skip ad breaks and to consume and share content in non-traditional formats has only increased with new technologies.

Sceptics will question whether Droga5 could become a pawn in a much bigger game of chess by ruthless bankers

So the theory goes that, if a consultancy could offer creative brand solutions (the traditional skills of an ad agency) integrated with at least temporary ownership of entertaining and truly engaging content (the domain of a strong modern talent management company), then brand owners could be extremely successful – and that agency would become extremely rich.

There have been numerous forays into this area over the past two decades. In the mid-90s, WME’s rival Creative Artists Agency briefly became Coca-Cola’s "ad agency". Five years ago, Mother created Somers Town for Eurostar in collaboration with Shane Meadows.

On paper, the partnership between WME and Droga5, two kings of their respective games, has the potential to take this to a whole new level.

However, such collaborations have so far been short-lived because it is easier to combine these two skillsets in principle than in practice.

Their respective motivations may also diverge. And there is an interesting financial aspect to last week’s deal. Inevitably, one reason Dave Droga sold almost half of his agency was to raise capital for expansion. Campaign understands that Droga turned down WPP – and probably others – as an investor in favour of a more "strategic" partner.

However, the finance behind WME is the venture capital company Silver Lake Partners, which has developed a growing appetite for buying marketing assets. So the sceptics will question whether Droga5 could become a pawn in a much bigger game of chess by ruthless bankers.

On the other hand, if Droga makes the right moves, it could work to his advantage. The stakes on this are high.

danny.rogers@haymarket.com

This article was first published on campaignlive.co.uk

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