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Giant ad agencies realize they have serious problems – and are finally making some bold moves

Sir Martin Sorrell, chief executive officer of WPP Group during the Opening Ceremony of the London 2012 Olympic Games at the Olympic Stadium on July 27, 2012 in London, England.
Sir Martin Sorrell, chief executive officer of WPP Group during the Opening Ceremony of the London 2012 Olympic Games at the Olympic Stadium on July 27, 2012 in London, England.
  • While the world's biggest advertising agencies continue to face "very real" concerns, these companies are exhibiting "increasingly outward signs of change," according to a new report.

  • Brian Wieser, senior analyst Pivotal Research, says that he is encouraged by a number of recent  ad holding company moves.

  • Interpublic Group's recent acquisition of Acxiom and Publicis' new organizational model, among other changes, signal a willingness to move more boldly, he says. 


The advertising industry finally seems to be waking up.

After being "mostly static" for quite some time, the industry seems to be attempting to tackle issues facing it head-on and is exhibiting "increasingly outward signs of change," according to a new report by Brian Wieser, senior analyst Pivotal Research. 

From brands taking both creative and media in-house to increasing competition from IT services (or consulting) firms, the ad industry has been grappling with a number of very real concerns in recent years, he writes. But the four major ad holding companies, including WPP, Interpublic, Omnicom and Publicis are all taking steps to combat those problems. 

Specifically:

  • Interpublic Group's recent acquisition of Acxiom can help it drive growth, according to Wieser, and represents a stake in the ground around the importance of data and related agency-like capabilities.

  • Publicis, he says, has been able to digitally transform itself better than its peers, with its years of investments in digital agencies and related competencies and its new integrated organizational structure "Power of One."

  •  WPP, according to Wieser, is in the midst of tremendous change as it looks to replace former CEO Sir Martin Sorrel as well as divest certain assets like Kantar.

  • Omnicom's selling of Sellbytel and Novus, he says, has favorably altered the company’s margin profile and its transparency. 

"... Significant strategic activity is afoot," he wrote. "... These changes will be helpful for each of the holding companies and the industry more generally."

While agencies are dynamic businesses with an enduring capacity to evolve, they still face certain risks according to Wieser. Client losses, increasing competition from consulting firms like Accenture and IBM and marketers squeezing fees are some factors that continue to threaten agencies.

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