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What does agency consolidation tell us about the future of the industry?

What does agency consolidation tell us about the future of the industry? Dan Brain

It might have started as a joke between Maurice Levy and John Wren at a social function, but the proposed $35 billion mega merger of Omnicom and Publicis could have serious consequences for your career or the agencies and advertisers you work with.

Earlier this summer, Sir Martin Sorrell said that further agency consolidation was “inevitable” and didn’t seem overly bothered about the prospect of WPP being toppled by POG as the world’s largest agency.

On the other hand, Havas CEO David Jones lamented the industry’s obsession with M&A, questioning whether it’s in the interests of clients and talent whilst pointing to the success of companies like Facebook who operate with a lean structure and large client base.

Meanwhile, Dentsu was busy incorporating Aegis following the $5 billion acquisition back in March.

So what does this flurry of M&A activity mean for agencies and about the way global marketing spend is evolving? Are the big networks nervously looking over their shoulders at the likes of Google and Facebook or just doing what they need to do to remain competitive in a global digital media landscape?

“The impact of the transaction on the media industry will likely be profound in ways that many observers have not fully considered as of yet. This is because of the ways in which we think the entity may change its media buying practices and the follow-on impact on the rest of the eco-system,” says analyst Brian Wieser.

“The combination of Publicis and Omnicom has negative implications on media owners whose revenue base is skewed towards advertising and especially those whose advertiser base skews towards large brands."

On the face of it, the agencies themselves seem in pretty decent health.

Last month, Dentsu confirmed that the Aegis deal helped the group to record a 60% surge in second quarter revenues.

Mischievous gibe not, Sorrell said last week that WPP had capitalised on client uncertainty around the proposed POG merger as profits leaped 19%.

Havas joined the party this week after reporting a “good six months” and an 8% increase in year-on-year profits.

It’s clear that next year will be an important one for the industry and you can expect plenty of lively debate and tactical insight in our closing keynote panel at ad:tech London next week.

Featuring Havas Media Global CEO Alfonso Rodes, Group M EMEA CEO Dominic Grainger, Starcom MediaVest MDSteve Parker, Google EMEA Agencies MD Mark Howe, UBS Lead Analyst for Advertising Tamsin Garrity and Media Week Editor Arif Durrani, we will get a glimpse of how the industry will look like in years to come but there will certainly be surprises along the way...

Featuring keynotes from Facebook, Unilever, AKQA, WPP Digital, British Gas, BBC Worldwide and much more, ad:tech London takes place on 11-12 September at The National Hall, Olympia. Click here for details.

Dan is currently Head of Content for for ad::tech London, the iMedia UK Digital Summit and iMediaConnection UK. He is responsible for the content focus of two of the UK's leading digital marketing events and has extensive event production,...

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