The makeover of Madison Avenue continues apace.<\/p>\n
In case you somehow missed it: Omnicom\u2019s deal to buy IPG closed late last month, meaning that two of the biggest ad agency holding companies have now, finally, become one. The $13.5 billion deal is the latest in a long line of agency consolidations, shuttered agency brands, talent exodus, and reorganized priorities across the advertising landscape.<\/p>\n
\u201cThis is a significant unprecedented contraction in the size of the entity formerly known as Madison Avenue,\u201d Andrew Essex, former CEO of Droga5 and the Tribeca Festival, told Marketing Brew. \u201cThis is like California falling into the ocean.\u201d<\/p>\n
The new Omnicom has already axed well-regarded creative agency brands, including FCB, DDB, and MullenLowe, as well as several IPG-branded shops, and there are roughly 4,000 additional jobs expected to be cut as part of the latest restructuring, per Adweek. IPG had already reduced its headcount by 3,200 this year, while Omnicom cut some 3,000 roles.<\/p>\n
Essex described the industry contraction as \u201cpart of the inevitable shift from a collection of firms into large platforms,\u201d which other experts note is increasingly focused on prioritizing data over creative output. In other words, the Madison Avenue the industry once knew is officially dead and gone.<\/p>\n
\u201cThe message [that] has come out of here is that media, cloud, and data matter more than ever before,\u201d Greg Paull, president of global growth at MediaSense, told Marketing Brew.<\/p>\n
New priorities<\/strong><\/h2>\nThe shift away from the holding company model in favor of a platform-forward model could be taken as a signal that the creative prowess that once mattered most no longer takes precedence for the new Madison Avenue.<\/p>\n
For those watching closely, the transformation has been happening for the last decade. Ten years ago, Paull noted, the industry \u201cwas much more ideas and creative-driven,\u201d while the latest shifts have prioritized technical prowess.<\/p>\n
\u201cI think there\u2019s been a big shift in the last 10 years over the importance of large-scale media and having the cloud, both for the marketer but also for the media owner,\u201d he said.<\/p>\n
That shift has often led to more consolidation among agency holding companies looking for efficiencies that allow them to marginally improve their position in the market\u2014just look at what WPP or Dentsu did long before Omnicom\u2019s acquisition of IPG, with the former fully retiring storied agency brands Young & Rubicam, J. Walter Thompson, and Wunderman and naming the combined agency VML, and the latter sunsetting more than 100 agency brands and renaming the combined group Dentsu Creative.<\/p>\n
While shuttering legacy agency brands has become commonplace, there\u2019s only so much consolidation holding companies can do.<\/p>\n
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\u201cThis playbook of combining smaller companies to gain efficiencies, backroom efficiencies, technology efficiency\u2026media-buying efficiency is over now, or very close to over, and the winners survive,\u201d Allen Adamson, co-founder of brand consultancy Metaforce, said.<\/p>\n
The big challenge now, he added, is for the remaining industry giants to keep Wall Street happy once the efficiency plays are complete.<\/p>\n
Consolidation station<\/strong><\/h2>\nThere could be more consolidation coming for Madison Avenue. Plenty of questions surround WPP as it continues to reorganize its own structure, while Dentsu is seeking a buyer.<\/p>\n
How much will it matter to marketers now that they have fewer choices on Madison Avenue? Adamson believes they could start to notice an absence of true differentiation.<\/p>\n
\u201cFor most clients, big is not necessarily better,\u201d he said, adding that in this landscape, major holding companies are \u201call big, homogenous, media, creative, quote, unquote, marketing advising machines.\u201d<\/p>\n
That could affect how advertisers feel about their agency partners. According to recent research from Forrester, 7 in 10 CMOs surveyed expressed some concern that industrywide restructuring \u201cwill have a negative impact on their business,\u201d Jay Pattisall, VP and principal analyst at Forrester, said.<\/p>\n
\u201cThe net [effect] is that the change in the turmoil of M&A, consolidation, AI, is that it will make marketers concerned about the neglect that could potentially happen for their business,\u201d Pattisall told Marketing Brew.<\/p>\n
A boon for independents?<\/strong><\/h2>\nIf that is the case, there could be \u201can escalation of the new-business pipeline in 2026,\u201d Pattisall noted, as marketers put their businesses into review.<\/p>\n
While the consolidated platform model could appeal to large clients, mid-size and smaller clients could find themselves having to decide whether to remain at a consolidated firm where they may be a lower priority, or jump ship for an indie firm.<\/p>\n
\u201cFor the middle- to lower-size marketers, unless media spend is above $100 million, they\u2019re going to really need to think through where they would sit within a holding company group,\u201d Paull said. \u201cThe challenge is going to be for the middle-tier clients. Will they not be better off with a smaller, independent agency and maybe an independent media agency that can still give them the quality of service that they [want]? Because they\u2019re going to struggle to get [it] in a larger holding company.\u201d<\/p>\n
It could end up meaning that independent agencies further emphasize relationships and talent as a point of differentiation to woo marketers and their budgets.<\/p>\n
\u201cYou\u2019re going to see, basically, whales and minnows,\u201d Essex said. \u201cSo, giant global platforms and elite talent-driven boutiques, founder-led, talent-first exemplified by rare craft specialists, and giant machines that can handle giant enterprises.\u201d<\/p>\n<\/div>\n
Get marketing news you’ll actually want to read<\/h5>\n
Marketing Brew informs marketing pros of the latest on brand strategy, social media, and ad tech via our weekday newsletter, virtual events, marketing conferences, and digital guides.<\/p>\n<\/div>\n<\/div>\n
\u201cThis playbook of combining smaller companies to gain efficiencies, backroom efficiencies, technology efficiency\u2026media-buying efficiency is over now, or very close to over, and the winners survive,\u201d Allen Adamson, co-founder of brand consultancy Metaforce, said.<\/p>\n
The big challenge now, he added, is for the remaining industry giants to keep Wall Street happy once the efficiency plays are complete.<\/p>\n
Consolidation station<\/strong><\/h2>\nThere could be more consolidation coming for Madison Avenue. Plenty of questions surround WPP as it continues to reorganize its own structure, while Dentsu is seeking a buyer.<\/p>\n
How much will it matter to marketers now that they have fewer choices on Madison Avenue? Adamson believes they could start to notice an absence of true differentiation.<\/p>\n
\u201cFor most clients, big is not necessarily better,\u201d he said, adding that in this landscape, major holding companies are \u201call big, homogenous, media, creative, quote, unquote, marketing advising machines.\u201d<\/p>\n
That could affect how advertisers feel about their agency partners. According to recent research from Forrester, 7 in 10 CMOs surveyed expressed some concern that industrywide restructuring \u201cwill have a negative impact on their business,\u201d Jay Pattisall, VP and principal analyst at Forrester, said.<\/p>\n
\u201cThe net [effect] is that the change in the turmoil of M&A, consolidation, AI, is that it will make marketers concerned about the neglect that could potentially happen for their business,\u201d Pattisall told Marketing Brew.<\/p>\n
A boon for independents?<\/strong><\/h2>\nIf that is the case, there could be \u201can escalation of the new-business pipeline in 2026,\u201d Pattisall noted, as marketers put their businesses into review.<\/p>\n
While the consolidated platform model could appeal to large clients, mid-size and smaller clients could find themselves having to decide whether to remain at a consolidated firm where they may be a lower priority, or jump ship for an indie firm.<\/p>\n
\u201cFor the middle- to lower-size marketers, unless media spend is above $100 million, they\u2019re going to really need to think through where they would sit within a holding company group,\u201d Paull said. \u201cThe challenge is going to be for the middle-tier clients. Will they not be better off with a smaller, independent agency and maybe an independent media agency that can still give them the quality of service that they [want]? Because they\u2019re going to struggle to get [it] in a larger holding company.\u201d<\/p>\n
It could end up meaning that independent agencies further emphasize relationships and talent as a point of differentiation to woo marketers and their budgets.<\/p>\n
\u201cYou\u2019re going to see, basically, whales and minnows,\u201d Essex said. \u201cSo, giant global platforms and elite talent-driven boutiques, founder-led, talent-first exemplified by rare craft specialists, and giant machines that can handle giant enterprises.\u201d<\/p>\n<\/div>\n
If that is the case, there could be \u201can escalation of the new-business pipeline in 2026,\u201d Pattisall noted, as marketers put their businesses into review.<\/p>\n
While the consolidated platform model could appeal to large clients, mid-size and smaller clients could find themselves having to decide whether to remain at a consolidated firm where they may be a lower priority, or jump ship for an indie firm.<\/p>\n
\u201cFor the middle- to lower-size marketers, unless media spend is above $100 million, they\u2019re going to really need to think through where they would sit within a holding company group,\u201d Paull said. \u201cThe challenge is going to be for the middle-tier clients. Will they not be better off with a smaller, independent agency and maybe an independent media agency that can still give them the quality of service that they [want]? Because they\u2019re going to struggle to get [it] in a larger holding company.\u201d<\/p>\n
It could end up meaning that independent agencies further emphasize relationships and talent as a point of differentiation to woo marketers and their budgets.<\/p>\n
\u201cYou\u2019re going to see, basically, whales and minnows,\u201d Essex said. \u201cSo, giant global platforms and elite talent-driven boutiques, founder-led, talent-first exemplified by rare craft specialists, and giant machines that can handle giant enterprises.\u201d<\/p>\n<\/div>\n