As the CEO of a media buying agency, I’ve witnessed firsthand the seismic shifts in our industry resulting from mergers and acquisitions. In the last ten years, this has been especially prevalent in the ad tech world, but lines between ad tech and agency service are now blurry at best. With the strong likelihood of deregulation within the U.S. economy and enticingly low interest rates in the coming years, consolidation in the advertising industry is on the cusp of another boom. This is despite the possibility of a government breakup of Google. While consolidation is viewed by some as positive, the reality is less rosy. This is especially true for many of the impacted clients and the people behind the agencies supporting them. With the proposed merger of Omnicom and IPG looming on the horizon, let’s delve into why this and other mergers may be a harbinger of troubling trends.
1. Stifling Innovation
Innovation thrives on competition. It’s the lifeblood of creative industries, where diverse ideas collide and coalesce into something greater. However, when large entities merge, the competitive landscape diminishes. Fewer players in the market means less incentive to push boundaries and innovate, as the newly formed behemoth can rest on its laurels, relying on its sheer market dominance rather than groundbreaking ideas.
2. Promoting Non-Transparency
Transparency is crucial in our line of work. Clients trust us to use their budgets effectively, making every media dollar accountable. Unfortunately, larger holding companies often have labyrinthine structures that obscure real costs and spending efficiencies. This merger threatens to entrench these opaque practices further, making it harder for clients to see where and how their investments are being managed, potentially hiding inefficiencies or even wastefulness under layers of corporate bureaucracy.
3. Neglecting Smaller Clients
In a world dominated by giants, the small often get overlooked. Mid-cap, small-cap, and private clients may find themselves deprioritized or outright ignored as larger firms focus on their most lucrative accounts. This could mean less attention to bespoke strategies that smaller clients need, as the conglomerate aims to maximize its return on investment by focusing predominantly on ‘big fish’ clients.
4. Impact on Employment
Consolidation is rarely without human cost. Mergers like that of Omnicom and IPG typically lead to redundancies as roles overlap and efficiency measures kick in. The result? Layoffs. Talented individuals lose their jobs, and those remaining may face increased workloads without commensurate compensation, leading to burnout and a decline in service quality. The human toll of these mergers extends beyond the immediate job losses, affecting morale and the broader community.
Final Thoughts
While mergers might look good on paper for shareholders seeking quick profits, the broader impacts are detrimental. Innovation suffers, transparency wanes, smaller clients get sidelined, and real people face significant professional and personal upheavals. As industry leaders, we must critically assess these moves, considering the long-term health of our field and the trust of those we serve. Let us advocate for a market that values competition, clarity, client service, and most importantly, its people.
