These two Sunday headlines are not unrelated. The bombshell news that IPG and Omnicom are merging...and the fact that ad revenues are going to hit $1 TRILLION and 5 tech companies are gobbling up half of it.
Whatever financial voodoo the holding companies were spinning, the magic has definitely worn out as the tech overlords gobble more of the pie. And since most of the ad ecosystem is digital garbage, who needs to pay the holding company vig when the Metas of the world will just have their A.I. robots make the ads for you.
Yesterday, in reaction to the Omni-IPG news, a colleague asked, "How is this good for clients?"
Nothing about the holding companies is good for clients. Except the fact that their balance sheet is so big, they can give away stuff that any sane business would charge for. ("Happy to lose hundreds of thousands on a year-long pitch, mega-brand, so I can create a bespoke 'shop' for you that will never make up the starting deficit but will allow me to put your logo on our website and keep the yacht at Cannes fueled up!")
The Omni-IPG press release will tout "synergies," but the only value in a merger like this is to cut redundant expenses and in advertising, "expenses" = people. Lot of folks going to lose their job and the net effect is that agency land will get smaller. (That shrinking is coming anyway, of course, but this will just hasten it.)
What agencies and ad execs will survive the consolidation? Let the Hunger Games begin! But we already know the winners: the tech companies who are collecting all the cash and killed the ad biz, as we knew it.
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2wThis is incredible news!