Jason Menezes’ Post

https://lnkd.in/eZYP-UYv? Advertising is an odd industry because there's a continuum from being a freelance creative type, owning a small service business, and running a global conglomerate, and at each level the constraints can be surprisingly similar. One of those constraints is that the human capital in the industry is incredibly mobile, and since the human capital is most of what they're selling, this makes it hard for any company to build a durable advantage. Individual people can, but they take it with them. There are some benefits to firms combining, though; they can diversify across different practice areas, for example—if agency A is good at digital direct response and agency B is good at TV spots, A and B together probably handled the rise of YouTube, ad-supported streaming, and CTV better than they would have apart. A diversified group of agencies is also a hedge, allowing any one group to underperform for a bit without falling apart. (This naturally requires management finesse, because what it means in practice is that whichever group is doing the best is slightly overpaid, and vice-versa, so they have to be good at identifying cycles and secular changes.) If the holding company model does work, and it seems to, what's the limit to which it can scale? We may find out soon enough, as Omnicom and Interpublic consider a merger, which would create the largest holding company. (They’ve since confirmed the deal.) One way to explain that opportunity is by omission. The current largest holding company is WPP, which didn't start out that way; its name is short for Wire and Plastic Products, but it was taken over by Martin Sorrell, who had previously helped build Saatchi & Saatchi into a holding company. WPP grew, mostly by acquisition, to become the largest ad holding company, and shares returned 15.1% annualized over his tenure, but he was ousted in 2018 due to assorted scandals (returns are flat since then). Whether or not he did that great a job managing it, any time a company is run by one CEO for multiple decades, and doesn't have a succession plan in place, it's very hard for it to stay on track. The next few years are a fun process of discovering precisely how much of the company's operations and strategy were contained entirely in the head of a now-ex CEO who isn't inclined to return phone calls. So there's room to scale a bigger holding company because the biggest is not in a great position to grow.

Tie-up would create world’s largest ad conglomerate in sector being upended by technology Combining Omnicom, the world’s third-largest ad company, and Interpublic Group, the fourth-biggest ad company, would topple WPP as the industry’s biggest player. WPP’s net revenue last year was about $15.1 billion. A merger could help Omnicom and Interpublic become better equipped to deal with an industry increasingly driven by technology, data and artificial intelligence. Ad companies are working to stave off competition from tech companies such as Alphabet’s Google and Meta Platforms that are using AI to drive deeper into the business. Generative AI threatens to disrupt how agencies get paid and could potentially diminish demand for copywriters, graphic designers and the ad buyers, who decide where to place ads to target the right audiences. Interpublic and WPP are struggling to keep pace with rival Publicis, which adapted faster to the technological shifts that reshaped how brands connect with consumers. The Paris-based firm has spent billions on buying data and e-commerce companies. It has also targeted companies that specialize in digital transformation advisory work to better position it against consulting firms with a growing presence in the advertising and marketing business. 

Industry insiders predict that Omnicom Group’s takeover of IPG Mediabrands will likely lead to the consolidation and elimination of legacy creative agency brands. https://adweek.it/3ZKLIse

Omnicom, IPG ink ad megamerger Omnicom Group has announced its acquisition of Interpublic Group (IPG), creating the largest advertising company in the world. Based on 2023 figures, the merged entity is expected to generate over $20 billion in net revenue. This strategic move comes as global advertising spending is projected to surpass $1 trillion. However, the merger may face significant scrutiny from government authorities due to concerns about market dominance. While this approach seems logical, agencies must embrace technological innovation to meet future work trends and client expectations. They should focus on leveraging AI tools and turning their services into products rather than relying solely on acquisitions and hourly billing. #Advertising #DigitalMarketing #Marketing

Global advertising firm #OmnicomGroup is in advanced negotiations to buy rival Interpublic Group (IPG) in what could create the world’s biggest advertising firm, The Wall Street Journal reported, citing people aware of the talks. Chief executive John Wren-led Omnicom boasts clients including #Disney, AT&T and PepsiCo, and has a slew of agencies such as BBDO Worldwide, TBWA\Worldwide, FleishmanHillard, and ad buyer Omnicom Media Group. Omnicom

This Hollywood power broker revolutionized the ad industry with one audacious move. In 1991, Michael Ovitz was already a legend in Tinseltown. His talent agency, Creative Artists Agency (CAA), represented the biggest stars in the business. But Ovitz had his sights set on an even bigger prize: Madison Avenue. He saw an opportunity to disrupt the advertising world using CAA's unique strengths. His target? The most iconic brand in the world is Coca-Cola. At the time, Coca-Cola's account was held by McCann Erickson, an advertising giant. But Ovitz believed CAA could offer something no traditional ad agency could match. Creatives that didn’t mirror culture, but created it. So he leveraged CAA's vast network of A-List Hollywood talent to create 50 ideas for Cokes 1993 global campaign and presented them in a duel pitch against Cokes AOR, McCann-Erickson. CAA's lean structure and lack of advertising experience allowed for more nimble and creative decision-making. They weren't bogged down by the bureaucracy typical of large ad agencies. Ovitz personally pitched to Coca-Cola's marketing team, showcasing CAA's fresh perspective. It was pure Hollywood. No research, no numbers, no strategy. Just 60 minutes of Coca-Cola, presented as a hero in multiple story formats and multiple formats targeted for multiple market segments that blured the line between entertainment and advertising. Seeing the Coke side so elated, McCann skipped a note to McCann’s vice chairman with two words: “We’re dead.”Indeed they were. McCann sold two ideas. CAA (a talent agency) sold 24. One of which, you may remember, involved Polar Bears This caused a seismic shift in the advertising landscape. Ovitz had proven that creativity with the best creative people could trump decades of industry experience. Traditional agencies were left reeling, forced to rethink their entire business model. But whatever they learned from that experience was soon forgotten. Today, the ad industry is ripe once again for disruption. But this time, instead of letting outsiders disrupt the industry, Laetro was built to bring CAA's outside perspective into the ad industry. The industry doesn’t need a new type of ad agency. It needs a new type of agency. #Advertising #Innovation #Hollywood #BusinessStrategy

BREAKING NEWS in Advertising: To compete with the impending IPG+Omnicom entity... WPP, Stagwell, dentsu, Publicis Groupe, and Havas have decided to combine to form a Mega Agency (Pictured below) How will this transform the advertising industry? PS: Apparently some people are taking this post seriously. It is serious. They're really merging. For reals... It's a joke.

FYI: Ad agency update: "If the firms combine, it would create the biggest ad agency in the world, they said, with more than 100,000 employees and $25 billion in annual revenue based on 2023 figures." "Omnicom Group, the giant advertising firm that owns St. Louis-based FleishmanHillard, said Monday it has agreed to acquire large rival Interpublic Group, whose Weber Shandwick has a St. Louis office." #OmnicomGroup #FleishmanHillard #WeberShandwick _______________ #StartLouis ______________

🚀 The ad agency landscape is booming with new entrants! From laid-off employees to industry veterans, everyone's jumping in. But with nearly 14,000 agencies in the US alone, can the market handle more? Marla Kaplowitz president and CEO of 4A's weighed in on the shift: tech is lowering barriers and the entrepreneurial spirit is thriving. Niche specialties and smart branding are keys to survival in this competitive arena, the article by Ad Age's Lindsay Rittenhouse. notes. https://bit.ly/3xHwNDx #AdAgencyBoom #StandOutOrStepAside

Omnicom DMs IPG: Is rivalry ko rishtedaari mein badal dete hain. All seriousness aside, Omnicom buying IPG undoubtedly makes consolidation advertising’s word of the year. The combined revenue of the two American agency holding companies stood at $25.6 billion in 2023 and knocked British WPP off its perch. Publicis must be annoyed because this news dropped mere days after it got Snoop Dogg to crown it as the top agency holding company. Agency-holding company rankings will see a change, of course. The new entity – it retains the Omnicom name – will perhaps look to bolster its margins against the Googles, Metas and Amazons. What will the other groups do? They won’t cede ground to Omnicom. No sir. One possibility? We will see the return of the acquisition race – independent agencies are the crown jewels once again. We spoke to agency and industry old hands ashish bhasin, Dr. Sandeep Goyal, and Rajiv Dubey and young champions Akshay Gurnani, Gautam Reghunath, Aalap Desai on what they feel this acquisition does for the agency ecosystem and indies. #advertising #Omnicom #marketing #ads