MUMBAI: The year 2018 will be known for a lot of things. It has been one of the most imperative years for the advertising and media industry. This year broke shackles and ideologies of how people traditionally perceived the industry. I think it is safe to say that the marketing books hereon will have a dedicated page for everything that occurred in 2018.
I am optimistic about 2018 being one of the best years for A&M industry (so far). Why, you ask? Because this has been one of the most momentous year for mergers and acquisitions. While news about mergers came in from all sectors of the media, the A&M world tasted its first big bite of consolidation this year.
We’ve all read and heard about the four extensive types of mergers, but it was only in 2018 where we witnessed all of them! The traditional case of two big networks (agencies) coming together, big agencies merging their businesses with small agencies, two small agencies coming together to take on big network agencies, and the most recent trend: consultancy firms opening agencies or merging with one.
Let’s start with the advertising giant WPP, where we saw a lot of action happen this year. One of the bigger mergers this year happened within the WPP group, where Wunderman and J. Walter Thompson were united to form Wunderman Thompson. The merger will help the group as Wunderman and J. Walter Thompson share many core clients, who will now have simpler access to the expertise of both agencies. Additionally, WPP’s GroupM, the leading global media investment group acquired an Indian digital agency, The Glitch. With this acquisition, The Glitch continues to work as an independently positioned brand, while taking advantage of GroupM’s larger infrastructure and ecosystem.
With a promise to simplify the business, WPP’s Chief Executive Officer merged one of its largest agencies, Y&R with VML, that left the ad industry gasping for breath. The disappearance of the 95-year-old Y&R brand, which had been part of the WPP empire since 2000, was a moment to pause and reflect on the pressures that the industry in general and ad agencies, in particular, are facing from changing client demands.
Similarly, international advertising agency M&C Saatchi acquired Manish Bhatt-led Scarecrow Media, where the new entity is called M&C Saatchi Scarecrow. This is M&C Saatchi’s full-fledged attempt to get a stronger foothold in one of the most competitive ad markets in the world, India. Advertising agencies are finding ways to navigate through an increasingly volatile landscape. One of those ways is consolidating the hundreds of agency brands under their roofs and merging the entity with another agency.
After years of headlines about consultancy companies eating ad agencies’ lunches, the two groups are increasingly starting to look alike. The consultancies are rising fast by gaining a foothold in the marketing department and wooing chief marketing officers with their vast array of data analytics solutions and strategies to solve big business problems that traditional agencies can no longer solve. Increasingly, we are seeing a lot of consultancies merging their business and resources with agencies to deliver better solutions to clients. The trend of consultancies and agencies coming together is shaking up the marketing industry. In 2018, we saw the likes of Accenture Interactive, PwC Digital Services, IBM iX and Deloitte Digital emerge as winners for brands as they are looking for areas to cut costs and drive better performance.
Right now, we’re at a point where the industry cares less about agency labels than ever before. This is an industry where so many people worry about whether something is an ad agency, a digital agency, a PR agency, or a consultancy. This may be the first time where the labels of agencies don’t really matter.
If your merger translates to 1+1=2, the merger makes no sense because there is no added value to it. However, only if your merger translates to 1+1 >2 (greater than 2), the time, effort and money that you put into the merger will be beneficial for both parties involved.
At the end of the day, I think consolidation is the way to go because it helps in playing on each other’s strength and delivering better results collectively. If agencies find the right partner to complement their existing skill set, it is only beneficial for both the parties. More importantly, the agencies and clients need to evolve with the changing time because their customers are evolving at a faster pace than them.
(The author is chief executive officer and co-founder, White Rivers Media. The views expressed here are his own and Indiantelevision.com may not subscribe to them)
