Another day another media agency disappears.
This time it’s WPP’s [email protected], which employs a somewhat mind-boggling 1000 staff and ‘advisors,’ which is being absorbed into WPP media holding GroupM. Two weeks ago WPP rolled global media agency Maxus into MEC. Last week WPP CEO Sir Martin Sorrell warned of fundamental structural changes in the ad behemoth’s media operations.
If clients are spending less they need fewer agencies and agency people to work on their business and that appears to be the reason behind these and, no doubt, other changes to come. Last year Omnicom closed its UK media agency M2M, ostensibly to put more resources behind successful US new entrant Hearts & Science in the UK. Hearts & Science, though, failed to add Procter & Gamble UK to the US business it had just won (P&G UK stayed with Publicis Media). It will be interesting to see if it survives in the UK.
Why are clients spending less? In the wake of various US ANA reports they’re cutting back on programmatic digital spend as they’re not sure where the money’s going. And busily squeezing margins on the money they do need to spend.
Media agencies have driven the growth of the big holding companies for the last decade or so. Creative agencies have already seen their margins heavily squeezed with many accounts being handled on money-driven holding company deals.
It seems the same is now happening to media agencies, with their vast workforces and overheads.