WPP acquires Corebiz and accelerates verticalization of e-commerce services

The multinational’s ‘tech’ services arm already accounts for 38% of revenue in 2021, compared to 25% in 2020

O WPP group, known for its advertising services, wants to show that it is increasingly digital. After the acquisition of DTI, a Brazilian software company, the British company announces the acquisition of Corebiz, a reference in the implementation of digital businesses in Latin America and Europe. The focus, on the British group’s side, is to function as a ‘one stop shop’ for digital services, operating at different points in the sales strategy: marketing, data, technology and, now, at the heart of everyday shopping. digital. For the Brazilian startup, the wide network of agencies spread across 112 countries works as an opportunity – quite a bit – for international expansion in times of increasingly tight rounds for companies outside the ‘early stage’.

This is the conclusion that a chat with Stefano Zunino, country manager of WPP in Brazil, along with Renan Mota and Felipe Macedo, founders of Corebiz, brings. To EXAM IN, the three reinforced the potential of the agreement, announced this Monday to the market, and discussed the future of the combined companies. The value of the transaction was not disclosed, nor the potential for additional revenue (or any similar data) that the new company could bring to the group.

What is known, on the other hand, is that the founders of the startup remain in charge of the business, which will be incorporated into the VMLY&R Commerce, the arm of the British group dedicated to the development of e-commerce for customers. The vertical already had another startup acquired in 2015, iNext, but there was still a lack of skilled labor in the implementation and management of websites and sales channels – the heart of the new acquired company.

“The pandemic has accelerated digital transformation and online retailing to unprecedented levels. This new behavior motivated us to want to provide our customers with e-commerce services and I believe that the most interesting platform for this in Brazil, Latin America and Europe is VTex. For that, nothing better than bringing the two best developers of this technology and their own company into the group”, says Zunino.

Going a little deeper into the details of what Corebiz does, the company’s activities can be summarized in five topics: deploying e-commerce solutions for companies that have never had this type of digital offer, evolving digital channels using user data as a source of improvement, develop new digital channels and integrate them aiming at the omnichannel as a final objective, provide specialized e-commerce consultancy and manage the performance of digital channels in a process of continuous improvement.

The startup was 100% bootstrapped (market jargon to designate companies that start a business with limited resources, without the support of investors). “We used to joke that ‘we didn’t even have a rich dad’”, says Macedo. The focus on growing without funding the market does not seem to have generated any type of loss for Corebiz. By serving a market with heated demand, the company has a CAGR (compound annual growth) of 80% in the last five years. Exact billing data is not revealed. Today, the company has 700 employees – up from 200 before the pandemic – and 140 customers, in addition to offices in Brazil, Mexico, Chile, Argentina and Spain.

“It is very difficult to enter a new culture, in a new country, without someone local. It’s not so much a language barrier, but more of how business is done. We now want to use the best that the WPP group has on their side along with all our capacity for local production development. As we prioritize Brazilian suppliers, we managed to be much more competitive in euro, for example, than the local competition. The idea is to understand who the customers are in each location and attack them in an organized way and with a lot of speed as well”, says Macedo.

Asked about the main challenge they see in making this plan a reality, the three executives do not answer anything related to market changes in the new post-pandemic reality, but they take a different path: talent. “It’s a good problem. We train employees who are in career transition because we have an exploding demand and we need to handle it. We are kind of a school for these developers”, says Mota.

And where does so much demand for services come from? The most obvious deduction – retail – is confirmed, according to the co-founders, who add another growing segment (and with less experience than the first, in addition to higher margins): the D2C, that is, the industry selling directly to consumers. Today, companies like whirlpool, Motorola and Samsung are in Corebiz’s client portfolio. Another segment that is also growing is supermarkets, according to the executives, who cite a large chain in France as one of the main customers in the segment.

The WPP plan: tech, tech and more tech

This set of factors makes a great addition to WPP’s portfolio of digital services, which is already growing at a rapid pace. With a ‘gas’ during and after the pandemic, the vertical of experience, commerce and technology closed the last year representing 38% of the group’s revenue, which totaled 12.8 billion pounds. In the previous year, when the group had a turnover of 12 billion pounds, the share was significantly lower, at 25%. It is on a recovery path from 2019 values, which exceeded £13 billion.

The plan to invest in the three pillars came even in the year before the pandemic – as shown in the corresponding year’s annual report – in which WPP is committed to making structural changes in the company, widely recognized by advertising services, with an eye on the potential that others have. markets present. In the report from three years ago, the company estimated that the communications market would grow by 2% to 3% by 2022, representing a £1 trillion market, while additional services would grow at a rate of 5% to 15% by 2022. , in a market of up to 900 billion pounds.

To complete this plan, the group invests both in in-house initiatives and in acquisitions. As the 2021 annual report shows, the company annually invests around £300 million (2% of sales) in research and development internally. Still looking at the digital environment, in the last year alone, three companies were acquired: DTI Digital (Brazilian software development company), NN4M (e-commerce for apps), Satalia (artificial intelligence) and Cloud Commerce Group.

In addition, the company combined the data capabilities of GroupM, a leading global media investment company, with Wunderman Thompson to create a new data company, choreograph. The focus is to analyze consumer behavior across different brands to generate insights. Also in 2022, the company launched the WPP Opena platform for agencies and clients to share best practices – including technology providers with whom they interact.

Within this environment of ‘innovation on the surface’, Zunino highlights the potential of Brazil as a market for expansion over the next few years. “We are confident in Brazil and we will continue investing to expand our operations here. We offer an integrated operation, which is a very important point for the client not to have 40 different suppliers, but to have a provider that has everything, something we are going to make more and more progress in”, says the executive. For the time being, the country’s revenue is not disclosed in the annual report, but only that of the region – which is far from being one of the ten most representative in the overall picture. In 2021, it generated 0.5 billion pounds.

The company is not alone in the crosshairs here. In fact, the WPP must increasingly face competition not exactly from current peers, but from technology companies (and consultancies) that are putting both feet in the advertising world. Some examples are Zmes, owned by Marcelo Tripoli, ex-McKinsey, in addition to PwC and Accenture — the latter has already purchased more than 30 companies linked to the advertising and publicity sector, to give an idea of ​​the investment.

To advance in the largest country in the region, Zunino does not deliver exactly how the strategy will be made from beginning to end, but it is certain that he does not rule out other acquisitions. “We are always attentive to the market and companies that can improve the service we provide to our customers”, he says. It’s the propaganda group’s way of saying it’s prepared to face the future.

Source: Exam