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Why bigger agencies net smaller fish?

Published

12 years ago

March 18, 2014

MUMBAI: Passion drives creative minds to set up independent agencies. In a majority of cases however, after the initial burst, resources become a constraint and growth avenues out of reach.

While being able to do what you want, pitch to the client of your choice or leverage the tools of your choice continue to be the perks of going solo, at some point, the smaller independent agency is forced to reflect on how long it can continue to stand alone successfully.

This is probably when selling out to a larger entity seems like the best option. In the past couple of years, there have been several instances of big networks snapping up smaller, independent agencies; the most recent being DDB Mudra’s acquisition of Bangalore-based 22feet. Indiantelevision.com spoke to a cross-section of the advertising industry in a bid to understand what really drives network agencies to invest in independents or conversely, independents to sell out or as in some cases, hold on to their freedom.

Vineet Gupta of 22feet, who will soon take charge as MD of the new entity, 22feet Tribal Worldwide, says mergers and acquisitions (M&A) aren’t necessarily about losing independence. “We have always wanted to outperform and be ahead in the market. And in Tribal, we found a partner which had the same vision like us and hence, we went ahead by joining hands,” he explains.

Praveen Kenneth of Law & Kenneth – at the time Law & Kenneth was integrated with Saatchi & Saatchi – had famously said that Law & Kenneth was born out of passion and had always focussed on adding value to client brands and to the lives of the people it touched every day. The story of Law & Kenneth was an example of the Saatchi & Saatchi spirit of ‘Nothing is Impossible’, and the combination of Law & Kenneth’s stability, proven success and experience in India’s dynamic market place and Saatchi & Saatchi’s iconic status and mystique had resulted in a creative powerhouse called L&K Saatchi & Saatchi.

WebChutney, a digital agency founded in 1999, became part of Dentsu India Group when the network agency acquired 80 per cent stake in it in 2013. How has it benefitted the independent agency? Says, the agency’s co-founder Sidharth Rao, “Our unique chutney culture is the same but yes, being part of a global network has helped in terms of new alliances & smarter processes. One of the best parts is that we have access to global learnings which we think will be a big advantage going forward in our journey.”

For Naresh Gupta, CSO and managing partner of Bang in the Middle, the iYogi in-house creative agency that went independent in 2012, the best marriage is when creative and cultural freedom isn’t taken away and bigger agencies only provide support through finance and sources to scale up. “There has to be a cultural match before any formal arrangement is made because a group which has invested too much money in acquiring one doesn’t want it to fall. It will only want it to grow as it wants back the money it had invested in it,” says he.

Publicis’ South Asia CEO Nakul Chopra believes that while cultural and operational differences between the two agencies would never cease to exist, it depends on how well they make the marriage work. “If the home-work has been done well before the acquisition is made and the two are culturally close at the core, there are not many difficulties between them. We at Publicis have a well-oiled and tested process that allows us to achieve that goal,” he says, adding that the acquisition is also about ‘strategic fit’. “Ideally and normally, we would want to acquire an agency when it fulfils multiples of strategic goals. In parallel, we also look closely at the culture of that agency and how well it fits into the culture of our network. Only after this, do we decide on acquiring any agency.” Chopra insists that acquisitions are not like buying a shirt and either the agency is in talks with someone or someone approaches the agency. What matters is how transparent and deeply connected the two agencies feel before shaking hands.

Dentsu India group executive chairman Rohit Ohri echoes similar sentiments. “Network agencies are always on the lookout for a holistic view. There are some or the other gaps which need to be filled-up so network agencies look for agencies which can do so. The fundamental law of any acquisition is that the two parties work closely in the pre-acquisition period to get to know each other’s culture and get a sense of partnership. There has to be a chemistry match otherwise it can lead to a fallout past acquisition or the smaller agency can collapse. There has to be a meeting of minds,” he explains.

On the bigger agency trying to impose its culture on the smaller one, he gives the example of Dentsu’s Taproot acquisition close to two years ago. “The merger has worked well for both of us. Dentsu has been able to work on major accounts (Congress being the latest client) that were won after the merger. Taproot has been a leading light in the creative field and has a strong reputation. So we follow what they set out to achieve. It is the other way round for us. We at Dentsu are trying to assimilate that,” he says.

And not all mergers end on a good note. Remember what happened to Enterprise Nexus? The agency was created in 1996 when Enterprise (born out of the partnership between Mohammad Khan and Rajiv Agarwal in 1983) and Nexus (founded two years later when Agarwal left the agency to launch his own along with Arun Kale) joined hands.

However, what started off great, fizzed out soon when Agarwal and Kale, gave up their shares to Khan, making him the majority shareholder in Enterprise Nexus. The agency was later acquired by WPP and merged with Bates India.

With a few mergers ending on a bitter note, it hasn’t stopped the majority of firms from acquiring others or launching new ones. So does the buck stop at M&A?

According to Anil Kakar, founder of Gasoline, a lean agency structure based on a collaborative model where both like-minded creative talent and projects have been cherry-picked to ensure faster and more cost-effective solutions, “A lean agency structure ensures a greater investment of time and thought into a campaign, a greater control over the creative output, customised solutions, faster turnaround times and access to some of the best brains in the business.”

“Obviously it helps in terms of getting access to a larger client base as well as in leveraging the media strengths of the network. The network consists of a unique bunch of agencies each with their own particular strength which is very useful when pitching to global brands,” adds Rao.

Gupta offers a different perspective altogether. “Acquisitions work both way; most independent agencies don’t want to remain small and want to add muscle and that can be only added either by becoming a network agency or becoming a part of a network agency. Also, it is very difficult for an independent Indian guy to go international and become a network,” he says.

However, agencies that are “okay with what they have” may choose to remain independent. Otherwise, the question “Can I make the business grow?” is bound to crop up from time to time. “Our country is a very competitive one and it is a price-sensitive market. Clients don’t pay agencies for the amount of work they do for them,” he adds.

In sum, you need to tread on M&A with caution: while it is necessary for further consolidation and growth, it can’t be achieved at the altar of the agencies’ DNA.

Related Topics:22Feet acquisition advertising Agency DDB Mudra Law & Kenneth Merger Praveen Kenneth Saatchi & Saatchi Vinnet Gupta

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Innocean renews global media partnership with Havas

Published

2 days ago

February 6, 2026

indiantelevision.com Team

MUMBAI: Innocean has renewed its global media partnership with Havas Media Network following an internal review across Hyundai Motor Group brands.
The renewed mandate spans Hyundai, Kia and Genesis across Europe, the Middle East, Asia Pacific and Latin America. The work will be coordinated with Innocean’s international teams in Seoul, Frankfurt, Dubai, New Delhi and Jakarta.

The refreshed alliance is designed with a sharper focus on data and technology, aiming to connect the dots across customer acquisition, conversion and retention as the Group’s global audience continues to diversify.

Innocean head of global business Steve Jun, said the extension reflects a shared push for stronger, data-led media performance across key markets. He added that the partnership would focus on creating more connected and effective customer experiences for Hyundai Motor Group brands.

Havas Media Network global CEO Peter Mears, described the relationship as one built on innovation and global scale. He said the next phase would lean on the network’s Converged.AI platform to deliver seamless, data-driven media experiences and drive business outcomes for the automotive brands.

The renewed partnership officially commenced in January 2026.

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Dentsu ad report 2026 flags digital dominance as retail media soars

Published

4 days ago

February 4, 2026

indiantelevision.com Team

INDIA: India’s advertising industry is entering a new phase of structural transformation, with digital media now the central growth engine, according to the Dentsu digital advertising report 2026.

Total advertising spends closed 2025 at Rs 1.21 lakh crore, up 8.3 per cent year on year, and are projected to reach Rs 1.40 lakh crore by 2027, implying a compound annual growth rate of over 7 per cent.

Digital advertising accounted for Rs 71,621 crore in 2025, representing 59 per cent of total spends. By 2027, digital’s share is expected to rise to around 70 per cent, with spends nearing Rs 98,034 crore.

The report stresses that this is no longer a temporary shift but a permanent rebalancing of advertising priorities, driven by mobile-first consumption, short-form video, creator ecosystems, embedded commerce and AI-led optimisation.

Retail media has emerged as the fastest-growing segment, with ad spends on e-retail platforms reaching Rs 17,601 crore in 2025: a surge of nearly 56 per cent year on year. Retail platforms are evolving into full-funnel media ecosystems, linking storytelling directly with purchase outcomes through first-party data.

Within digital formats, social media leads with a 29 per cent share, closely followed by online video at 28 per cent, while paid search contributes 23 per cent. Online video is expected to overtake social as the largest digital format over the next two years.

Programmatic buying now accounts for 42 per cent of digital spends, exceeding Rs 30,000 crore, and is increasingly becoming the default media operating layer across video, connected TV and retail platforms.

FMCG remains the largest advertising category at 30 per cent of total spends, followed by e-commerce at 18 per cent, which also recorded the fastest growth.

Dentsu South Asia chief executive Harsha Razdan said the most meaningful industry shift has been in how consumers consciously allocate attention.

Dentsu South Asia president and chief strategy officer Narayan Devanathan, added that the next growth phase will belong to organisations that successfully integrate creativity, data, media and technology.

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Publicis Groupe posts strong revenue as AI drives demand

Published

5 days ago

February 3, 2026

indiantelevision.com Team

PARIS: Publicis Groupe is laughing all the way to the bank whilst its rivals scramble to catch up. The French advertising colossus reported full-year 2025 net revenue of €14.5bn, marking its sixth consecutive year of outperforming the industry. Organic growth hit 5.6 per cent, accelerating past its five-year compound annual growth rate of 5.0 per cent.

The secret sauce? Artificial intelligence-powered products and services, which contributed roughly 300 basis points to growth. Arthur Sadoun, chairman and chief executive, has staked Publicis’s future on becoming clients’ “most valuable partner” for what the firm calls “agentic business transformation”—essentially helping companies build enterprise-grade AI solutions that actually make money.

The fourth quarter proved particularly robust, with organic growth of 5.9 per cent despite tougher comparisons. Connected media, which accounts for 60 per cent of the business, surged with high-single-digit growth. Creative and production services delivered mid-single-digit expansion. Only the technology consulting arm stumbled, finishing nearly flat for the year as clients adopted a “wait-and-see” attitude—a malaise afflicting all IT consulting firms.

Geography tells a tale of American dominance. The United States, representing 57 per cent of group revenue, grew 5.2 per cent organically for the year, cementing Publicis’s position as the market leader. Europe managed 4.2 per cent growth, whilst Asia-Pacific posted 5.8 per cent, with China impressing at 6.0 per cent. The most dramatic expansions came from emerging markets: Latin America roared ahead at 18.7 per cent, whilst Middle East and Africa surged 10.8 per cent.

Operating margin improved to 18.2 per cent from 18.0 per cent, delivering 50 basis points of operating leverage. Crucially, Publicis reinvested 30 basis points—totalling 230 basis points overall—into AI capabilities, talent upgrades and new business development. The remaining 20 basis points flowed straight to the bottom line. Michel-Alain Proch, chief financial officer, called it “the highest operating margin in the industry”.

Free cash flow before working capital changes reached €2.03bn, up 10.6 per cent from an already-record 2024. The firm deployed roughly €1bn on bolt-on acquisitions targeting identity resolution, pharmaceuticals, influencer marketing and sports marketing. Client retention remained stellar at 98 per cent for top-100 clients, whilst new business wins exceeded $8bn.

Headline earnings per share climbed 6.6 per cent at constant currency to €7.48. In dollar terms—increasingly relevant given Publicis’s American dominance—EPS rose 7.0 per cent to $8.45. The board proposed a dividend of €3.75 per share, up 4.2 per cent, representing a payout ratio of 50.1 per cent, which Publicis claims is the highest in the industry.

The financial fortress looks impregnable. Net debt turned into net cash of €548m by year-end, down from net cash of €775m the previous year after funding acquisitions. The firm maintains €2bn in undrawn committed credit facilities and €4bn in cash and marketable securities. Average net debt to EBITDA stood at a negligible 1.0 times.

Industry sectors showed divergent fortunes. Consumer goods clients increased spending by 20 per cent, whilst automotive rose 14 per cent and financial services climbed 11 per cent. Technology clients, however, cut budgets by 7 per cent, and telecommunications spending dropped 2 per cent.

Publicis’s AI strategy extends beyond client services to internal transformation. The firm is “agentifying” processes using AI agents, equipping all 100,000-plus employees with AI tools through its Marcel learning platform. The goal: make everyone “AI-fluent” whilst boosting productivity and results. The company reckons AI-powered capabilities grew 20 per cent organically in 2025.

Looking ahead, Publicis guided for 2026 organic growth of 4.0 to 5.0 per cent—marking a potential seventh consecutive year of industry outperformance. Operating margin should tick “slightly” higher from the already-elevated 18.2 per cent whilst maintaining “high levels” of investment. Free cash flow is targeted at roughly €2.1bn, based on an exchange rate assumption of €1.20 to the dollar, earmarked for dividends, maintaining a stable share count and more bolt-on acquisitions.

The firm’s longer-term ambitions border on audaciousness. Management projects annual net revenue growth of 6.0 to 7.0 per cent and earnings-per-share expansion of 7.0 to 9.0 per cent, both at constant currency. The logic: AI is fragmenting the marketing landscape, with no top client spending more than 4.0 per cent of budget on any single platform. Publicis reckons its “unique connective tissue” positions it perfectly to orchestrate this complexity.

The advertising world has witnessed a decade-long reshaping. Since 2017, when Publicis began its data and technology pivot, the firm has invested €14bn integrating capabilities whilst rivals dithered. That first-mover advantage in AI has compounded. Publicis now claims the number-one position in global media billings, including in the crucial American and Chinese markets. Its market capitalisation exceeds the combined value of its next two competitors.

Yet competition is heating up as everyone piles into AI. Omnicom’s proposed merger with IPG would create a formidable rival. Technology giants are muscling into advertising with their own AI platforms. And clients are becoming more sophisticated, building in-house capabilities and squeezing agency margins.

Publicis is betting the farm that complexity favours the orchestrator. As marketing technology proliferates and AI agents multiply, companies will need partners who can connect the dots. Whether that vision proves prescient or hubris will determine if Sadoun’s transformation becomes a case study in strategic brilliance or just another expensive pivot that failed to justify its price tag. For now, though, the numbers suggest Publicis is winning the AI arms race in adland—and widening the gap with every quarter.