WPP is to merge its J Walter Thompson and Wunderman agencies to streamline the services the marketing and communications group offers clients as the advertising industry grapples with technological disruption and a new generation of competitors.
The group, which confirmed a Financial Times report about the deal, said the merged entity would be known as Wunderman Thompson. The combination is the latest attempt by WPP to simplify in response to client demands about its overly complex structure.
WPP was built through acquisition by its former chief executive Martin Sorrell and consists of dozens of companies specialising in media buying and planning, data analytics and creative advertising work for clients.
However, the group and its peers, such as Publicis, are simplifying their operations to appeal more effectively to the biggest brands that buy advertising. WPP has already announced plans to merge its Young & Rubicam and VML agencies as part of a streamlining push by Mark Read, its new chief executive.
The combination of JWT and Wunderman, which already share common clients such as Bayer and Unilever, is the latest step in that direction, according to people briefed on the plans.
"Clients want greater simplicity from their partners," said Mr Read, adding that the merger was "designed to reshape our company around their needs".
Mel Edwards, currently chief executive of Wunderman, will be chief executive of the new company. Tamara Ingram, chief executive of J Walter Thompson, will become chairman.
The merged agency will employ 20,000 people in 90 markets around the world. It is unclear how many jobs will be cut as part of the deal, but the combination means the end of JWT as a standalone name and advertising brand.
The agency is one of the industry's oldest. It started in the US and was the first to expand internationally, opening its London office in 1899. It created the first "test kitchen" for its clients, where, in the 1920s, it is credited with popularising the grilled cheese sandwich for Kraft. Unilever has been a client of JWT for more than 115 years.
The merger comes as WPP grapples with a share price that has yet to recover after tumbling more than 10 per cent last month. The fall coincided with Mr Read's first quarterly results as chief executive, when he called for "radical thinking" to reverse a year-long slide in earnings.
However, it scored a win this week when it landed Volkswagen's creative account in North America. WPP shares closed 3.3 per cent higher on Monday at 881.2p.
The advertising landscape has been upended by Facebook and Google, which suck up most new digital spending, as well as the emergence of new competition in the form of consultancies such as Accenture, which have moved into space that the big ad holding companies such as WPP used to have to themselves.