WPP builds on technology portfolio with $70m deal to buy into South American software firm Globant

More evidence has emerged that WPP doesn’t see itself as purely a client-based advertising business any more: the marcoms giant has invested $70m to buy a 20 per cent stake in Globant, a Buenos Aires-based software business headed by Martin Migoya that turns over about $100m a year. So WPP is paying a hefty premium for its shares.

Why? Here’s WPP boss Sir Martin Sorrell: “Increasingly, clients want better coordination between their IT departments and their marketing departments, between their Chief Information Officers (CIOs) and their Chief Marketing Officers (CMOs). There are many consulting companies or digital agencies that are expert in one function or the other. Few, if any, do both and even fewer can integrate deep technical and creative capabilities on a global scale as Globant does.”

Globant claims in-depth digital expertise across the board, including “gamification (wow), social networks, cloud computing, big data and e-commerce.” Clients include American Express, JP Morgan Chase, LinkedIn, Electronic Arts, Google, Coca-Cola and National Geographic as well as a number of WPP companies including JWT, Young & Rubicam, Grey,GroupM and Kantar (WPP’s research unit).

Globant CEO and co-founder Martin Migoya (left) says: “Our core competencies in gamification, cloud computing, big data, social networks and mobile enable us to deliver innovation to our customers and add value to their efforts to reach end users through software products. We are focused on staying ahead of the technology curve, which makes us the right partner for companies looking to build and engage consumers in a global way.”

“We are extremely proud to welcome WPP into our family; their support will help us to achieve our goal of becoming one of the most innovative software development companies in the world.”

The question for WPP and its shareholders is what benefit will Globant bring to the company? it’s pretty clear what benefit WPP brings to Globant – money and a distribution network.

We reported yesterday on WPP’s seeming desire to become one of a select number of gatekeepers to the digital world. Seen in that light, the stake in Globant may be a defensive measure, a hedge against Globant’s technology changing the rules of the digital game.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.