The muddle of agency mergers

How agency mergers and consolidations risk plunging the marketplace into further confusion

Working closer on something, we’re told, is a good thing. Two heads are better than one, and all that.

But what about two agencies? What about several?

Collaboration can be catalytical to producing great ideas and to making good work, but is there a threshold for collaboration? Not just when it comes to creativity, but the wider marketplace and client decision-making.

You might argue that fewer agencies out there means brands have it easy when it comes to selecting one. After all it could end up as a choice between several, and not hundreds.

But choice is a good thing. For brands, a variety of agencies offers them a variety of opportunities and avenues to take. Not a bad thing when there’s the added likelihood brands mightn’t be 100% settled on the direction they need to take.

With agency mergers and consolidations on the rise, is a dwindling pool of agencies putting the marketplace – for brands and agencies alike – in danger? Is it all becoming a bit of a muddle?

The year of mergers

2018 has seen more mergers and consolidations of agencies than ever before. Not only smaller independent agencies who might have always anticipated a big buyout on the horizon, but established ones too – ones my grandmother would recognise the names of.

According to Mark Ritson, agencies have been around since the 19^th Century. That makes them older than television, radio, the internet, and yes, even opinion pieces about agency mergers.

But what happens when these legacies are consolidated into one? Sure, it’s easy enough to merge the name. (Think back to your nightmarish rack of Scrabble tiles last Christmas and chances are they’ll form an agency name.) But the history and traditions are a little trickier to combine.

What became of the individualities of Response One, Amaze One and Occam who in March became Edit under the umbrella of  now newly formed Kin + Carta (previously St Ives group)? Or of the different parts that formed the Scrabble-tastic VMLY&R? Then there’s WPP, Wunderman Thompson, Engine Group’s consolidation of WCRS and Partners Andrew Eldridge and others– to name only a few.

It’s worth asking why this is happening? Especially so frequently throughout 2018. There’s some chatter that it’s a necessary move when profits are dropping, or unsavoury accusations are flying. Others say they’re branding their agencies for the future. Whilst some say it’s a necessary adaptation to client demands.

Whatever the number of different motivations for the mergers or consolidations, it’s likely that these changes will all share a similar impact. Not on themselves, but on brand’s decision-making.

A brand’s dream?

As I said earlier, fewer, more multifaceted agencies might be a brand’s dream. But whilst the number might dwindle, making sense of the landscape isn’t about to get any easier. Especially when it’s something a lot of brands have struggled with for years before now.

If you’re a brand, how do you go about selecting your new agency when the ones you did know have all changed their names or been gobbled up by the agency giants? With the traditional pitch process as long as it is, it’s not inconceivable to imagine an agency changing its name or ownership from the time the RFI goes out to appointment. Think on that for a moment.

Then there are the clients who may have freshly appointed an agency, handing over millions in the process. When said agency is suddenly subsumed by another and now coins itself as an innovation agency, where does that leave a client who’s simply after a solid DRTV ad? It can happen overnight, and when those emails to key hires start bouncing back saying people have moved on, it can cause more than a little anxiety. The question is will brands stick around and strive to understand what they’ve ended up with? Or will they be thinking of another agency review?

The rise in in-housing and consultancies

One unintended consequence of all this could be the rise of in-housing. If the agency marketplace gets increasingly complicated and risky for brands, then why wouldn’t they look to bring services within their four walls? Especially after seeing success stories such as Sky’s 300-strong Sky Creative agency developing all of its Christmas marketing for the first time this year. The broadcaster displaying such considerable faith in its internal creative is quite the statement.

Then there’s Channel 4 and Condé Nast and many more, doing the same. It’s not just the ideas you have to think about, especially in these times, such decisions are doubtlessly saving the clients millions of pounds.

There’s a chance it might lead to a rise in brands turning to consultancies too. In Q1 and 2 of 2018, it was consultancies who dominated the marcomms M&A league tables. With their easy access to the C-suite at plenty of FTSE100 companies, they must be licking their lips at the fluctuations in the marketplace. Some might question whether they have the creative credentials marketers need to push them over the line, but you have to ask whether that’s what marketers are even looking for anymore.

What now?

The merger of JWT and Wunderman  took 100s of years of agency brand building with it. So how will these newly formed agencies sit in the everyday marketer’s mind? The intangibles of these agencies, the culture, its ethos, its reputation – all has been wiped clean.

The problem is, it can’t take another 100 years. It can’t even take one. Marketers are expected to assimilate marketplace information on a daily basis, regardless of whether it’s pitch time. The worry is that they’re already shying away from making these decisions. And further political and financial uncertainty in the market won’t help that.

What now, stands out the most for marketers in their decision-making? Is it:

• An agency’s culture
• How innovative they are?
• How nimble they can be when it comes to multiple channels and a tight budget?

It could be one, it could be all. Or, it could be no decision at all. Either way, we are headed for increasingly confusing times.

But what Creativebrief can help with is understanding them. The agency landscape has been one we’ve looked to navigate every day for the past 12 years. Not just through work, but through the individuals we meet with, get to know, and support. Our proximity to agencies – before, during and after any consolidations and mergers – remains just as close. Which is why our understanding never wavers, and why more crucially for brands, it can help them make a decision that’s right for their business without bias.

We’ve made sense of plenty of industry shifts over the years. And this one will be no different.

It’s unlikely agency mergers and consolidations will slow down anytime soon, so knowing how to get to grips with a changing industry is best done sooner rather than later.

That’s how we concentrate on what’s really important – creating great work.