The news: WPP is reportedly eyeing a merger with holding company Havas and private equity firms KKR and Apollo, per the Times. WPP’s stock leapt as much as 6% Monday on the back of the rumors, but both WPP and Havas declined to comment on the deal.

Zooming out: As WPP feels the pressure to increase its size amid Omnicom and IPG’s impending merger, an acquisition could offer critical support in a trying time for a company that was once the largest agency worldwide.

• WPP cut its full-year outlook in Q3 as organic revenues fell 5.9% to £2.46 billion ($3.14 billion), while its first half of the financial year saw profits drop a massive 71% pre-tax. New CEO Cindy Rose attributed Q3 losses to the company failing to move “fast enough” to meet client expectations in the age of AI.
• As the traditional holding company model built on service diversification declines, WPP is struggling to prove its ability to match its competitors’ pace of innovation. AI investments like its WPP Open Pro tool are promising, but have yet to prove that they will drive measurable performance compared with competitors’ AI systems.
• Slow innovation has led to several notable losses for WPP. The company lost accounts like Coca-Cola’s North American media business and its Mars’ global media account to Publicis Groupe, and previous CEO Mark Read noted a drop in client ad spending as a major contributor to WPP’s successive revenue losses.

What a merger would mean: Merging with Havas could be a critical step in keeping WPP competitive. A merger would allow the company to regain competitiveness, improve its service offerings, and meet the evolving needs of advertisers—critical as agencies across the board struggle to make new business sales, drive revenue growth, and adapt to rapidly changing market trends.

• A merger would provide much-needed scale and service diversification, helping WPP give clients a broader, integrated suite of services. Combining WPP and Havas’ capabilities would notably enhance each company’s technology and data capabilities as they look to compete against Publicis and Omnicom-IPG to win the modern data wars.
• As the traditional agency model shifts toward automation and measurable ROI, a merger would help WPP streamline operations, reduce redundancies, and improve cost efficiency. A merged entity that improves on WPP’s current automation capabilities would give WPP a better chance of winning new business.

What it means for advertisers and WPP: A merged WPP and Havas would provide more value to advertisers by giving access to a broader mix of services. For WPP, a merger would serve as a defensive strategy in a market where advertisers are reconsidering ad spending—giving the company a stronger ability to weather industry headwinds.