Ad executives predict a significant shake-up in the industry for the upcoming year in M&A.
Consolidation seems to be the buzzword in the advertising industry as we move further into 2025. The monumental merger between Omnicom and IPG last year set the tone for what promises to be a transformative year. The signs of consolidation are everywhere, with Leo Burnett merging with Publicis Worldwide to form ‘Leo’ and independent agencies exhibiting a proclivity for acquisitions.
One area of interest this year will be agencies specializing in AI, a favorite topic in the industry currently. Apart from this, what other trends can we expect to see in the coming months regarding mergers and acquisitions? Industry insiders provide valuable insights into the landscape ahead.
Alan Brown, co-founder of DNA&Stone, highlights the differing consolidation strategies between holding companies and independent agencies. While holding companies focus on metrics to enhance their financial standings, independent agencies prioritize client needs, market dynamics, better creative output, nimble experiences, and increased value for brands. Brown predicts an increase in smarter, nimbler mergers among independents, enabling them to compete more effectively against holding companies.
Chair and co-founder of Iris, Ian Millner, points out that big networks consolidate to safeguard their finances but mentions the slowdown in new startups entering the market. Buyers nowadays are more cautious, demanding strong justifications for their investments. Disruptors and high-growth categories like Superson, Atomic, and Zeal are reshaping the landscape, signaling an imminent transformation within the industry.
MD of McKinney, Swapnil Patel, emphasizes the significance of agency M&A in 2025, focusing on performance, data integration, and technology. The key to success lies in scaling without losing agility, emphasizing AI-driven planning, commerce media, and data-fueled creativity to maximize media impact. Patel underscores the importance of effectiveness over efficiency, translating insights into impactful ideas that drive business growth and competitive advantages.
Global CEO of Dept, Dimi Albers, raises a critical question about the outcome of the flurry of deals in the pipeline. While deal discussions might be plentiful, actual closures remain uncertain, leaving room for distractions that may affect client services adversely. Albers cautions against misleading claims surrounding AI capabilities, estimating that only a small fraction will genuinely deliver exceptional results. Both buyers and sellers need to exercise caution in navigating the increasingly complex M&A landscape, ensuring that the focus remains on delivering tangible results for clients.
As the year progresses, the industry is poised for significant transformations, driven by evolving market dynamics, client expectations, and technological advancements. The future of advertising agencies hinges on their ability to adapt, innovate, and deliver value in an increasingly competitive and ever-changing landscape.