The landscape for media agencies is poised for significant changes as the year 2025 approaches, with various factors influencing this evolution. The upcoming administration, led by a president known for challenging the status quo, is anticipated to foster a deregulatory environment. This shift is viewed with cautious optimism as it coincides with the growing capabilities of generative AI technologies, including the emergence of “agentic” AI — a term that encapsulates the new wave of AI applications that are becoming increasingly integral to business processes.
In mid-December, Omnicom announced its ambitious move to acquire the Interpublic Group, prompting analysts to predict a surge in acquisition and consolidation activities across other holding companies in the media sector. Speculation suggests that WPP, traditionally the largest global holding company, or Havas, which recently separated from parent company Vivendi, could soon be in the sights of prospective buyers. A holding company board member, opting to remain anonymous, shared insights regarding potential private equity involvement in future consolidations. “What I would expect, in all honesty, is for private equity to team up with [another holding company]...if the intent is to remain independent,” the individual explained.
While the prospect of a merger between the two largest agencies, WPP and Publicis, seems unlikely due to various complexities, smaller firms in the second tier are expected to attract buyers. Stagwell, a second-tier holding company, appears to have a more conservative approach to growth. CEO Mark Penn articulated the company’s strategy, stating, “I’ve always felt that the ideal size in the marketing industry was really closer to the $5 or $6 billion level, and we’re $2.5 billion and growing.”
Despite a promising outlook with potential regulatory loosening under the forthcoming Trump administration, concerns loom over the participation of Omnicom and IPG in the now-defunct Global Alliance for Responsible Media. The organisation drew criticism from Rep. Jim Jordan (R-Ohio), suggesting that the agency giants may face unexpected hurdles despite an otherwise favourable market environment. An Omnicom representative declined to provide a comment regarding these concerns.
The anticipated deregulatory climate is expected to benefit further investment in advancements in generative AI, which promises to save time, optimize resources, and provide insights from extensive datasets. Companies within the media sector are beginning to harness the capabilities of AI technologies which have proved influential, particularly in the realm of search where competitors such as Perplexity and Microsoft’s Copilot challenge Google's dominance.
However, challenges remain, as noted by Alison Pepper, Executive Vice President of Government Relations and Sustainability at the 4A’s, who highlighted the importance of navigating copyright concerns when producing client assets. “They care quite a bit about transparency too—trying to have more insight into what their AI provider is actually doing so that they’re not exposing themselves to liability in the process,” Pepper explained.
As the conversation between brands and consumers becomes progressively more direct, agencies see the need to integrate generative AI into their operations as a matter of survival. According to Steve Boehler of Mercer Island Group media consultancy, “Agencies are gung ho [about AI] anyway. The big agencies need to reinvent themselves to survive...AI will change things, but not in cataclysmic ways.” However, he expressed concern over the prevailing uncertainty surrounding the agency landscape and the broader economy during this transitional period. “In a really surprising way, I think that this new administration adds uncertainty to everything,” Boehler remarked.
As stakeholders within the media agency sector brace for what is expected to be a tumultuous period of transformation and consolidation, the emphasis on adaptation and forward-thinking strategies will be crucial. The interplay between generative AI innovations and a shifting regulatory framework is set to redefine the operational landscape, compelling companies to navigate these changes with agility and foresight.
Source: Noah Wire Services