Advertising leviathan WPP (WPP) has announced the acquisition of AI specialist Satalaia, one of the fastest growing UK technology companies.

Satalia employs enterprise software that uses machine learning to help businesses improved their efficiency. Satalia is best known for its Delivery and Workforce products.

Workforce optimises the scheduling and routes of delivery vehicles in real time in response to orders. Clients for this offering including Australian supermarket chain Woolworths and DFS.

The share price response to today’s acquisition of Satalia has been decidedly muted, the shares ticking up 0.6% to 978.2p. There are three main reasons for this.

First, the deal is relatively small in size and although it is within the exciting field of AI (artificial intelligence) it is unlikely to make a meaningful impact on WPP’s earnings.

Second, the deal may be perceived as being too little too late. In the recent question and answer session for analysts following the interim results presentation, concerns were voiced with respect to the lack of M&A activity.

This is particularly significant given its rival S4 Capital (SFOR) has been on the acquisition trail, enhancing its scale and scope within the digital advertising space.

Since its inception in 2018, S4 Capital has undertaken 24 acquisitions.

Third, today’s acquisition may reignite broader concerns that WPP lacks a coherent strategy to compete within the digital arena. The company recently announced the creation of Choreograph, its newly formed global products and technology company aimed at turning customer data into intelligence. Today’s acquisition seems out of sync with this broader strategy.

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Issue Date: 23 Aug 2021