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Marketers are still processing the news that Omnicom Group will acquire Interpublic Group of Companies (IPG), a $13 billion-plus deal that will create the industry’s largest ad-holding group and consolidate the playing field in a beleaguered agency category. While many uncertainties still hang over the transaction, which is expected to close in the second half of next year, the formation of a capital “M” mega-agency may open further inroads to small- and mid-sized marketing services providers that have started to win more significant business by positioning themselves as alternatives to sprawling networks with layers of complexity and stodgy strategic thinking.
“The challengers for this deal will be the smaller and more nimble boutiques,” said Greg Paull, president of global growth at MediaSense and co-founder of R3, in emailed comments. “The importance of the independent is not diminishing.”
There has been a pattern of brands delegating more work to upstarts this year, particularly in regards to creative. General Motors in June added independent shops Mother and Preacher to its roster, shifting away from the dedicated Chevrolet agency Commonwealth/McCann, an IPG-owned division, and Leo Burnett Detroit. Häagen-Dazs a month later named startup Nice&Frank its creative agency of record (AOR), tasking the two-year-old company with crafting its first Super Bowl campaign. Disruptor agencies like Mischief @ No Fixed Address and Highdive have become critical and awards darlings amid a challenging period for creativity.
The trend toward independents could further accelerate in the wake of the Omnicom-IPG combination, analysts agree. But independents still need to put in the hard work to convince marketers to switch up their approach to partnerships, all while keeping in mind a preference for marketing that can be tied to revenue results.
“Companies that provide strong data, technology and are nimble enough to move quickly meeting the needs of the demand will stand to win during this time in the market,” said Brian Mandelbaum, CEO of Attain, over email. “Mergers take a long time to complete, but anyone who can deliver on business outcomes for the advertisers and/or supply the new tech stack that Omnicom and IPG are creating will stand to gain.”
The break away from the traditional holding company model will also continue to happen in a piecemeal fashion instead of a radical exodus. The importance of the AOR has been diminishing for years, with more brands maintaining a list of agencies of various sizes and specialities that are tapped for different campaigns.