Are the big ad holding companies still holding up?

For decades they’ve been the central plank of the worldwide advertising empire but now people will be asking (of the ad holding companies) do we need them? Is their time up?

So far in Q3 we’ve had Publicis still leading the field with 5.8% growth, Omnicom on either 6.5% or 3.5% depending on how you count) while WPP and Interpublic are more or less flat (WPP wouldn’t agree, claiming O.5% like-for-like growth.) Havas reported a net revenue fall of 0.5%, which hardly augurs well for the life it plans as an independent quoted agency.

For the latter three calculating growth or no growth is rather angels on a pinhead: the margins are so tight there must be room for statistical error.

So what’s the problem? For Publicis there doesn’t seem to be one. Its investment in tech and data has paid off handsomely. So, it would appear, is its ‘Power of One’ mantra although it seems to have as many agency brands as ever. Maybe it’s that Gallic way with definitions. After all Napoleon managed to present himself as a man of the people even as he was planning to be emperor.

Down the line the threat to Publicis may be the “personalisation at scale” driving its media and data businesses. This could create Google-like issues over privacy.

Omnicom carries on doing what it’s been doing mostly well for decades, juggling its creative and media assets. Although it’s revealing that Ad Age’s latest Big List has it in fourth place by revenue, behind WPP, Accenture Song (mostly digital), and Publicis. Deloitte digital is fifth ahead of IPG and Dentsu.

Running WPP must be rather like a colonial-era empire. There always seems to be some trouble brewing on the frontiers of its far-flung empire, whether it’s ructions in Africa with minority shareholders or unruly Australians. It does so many things it must be nearly impossible to do all of them well. Less must surely be more in financial terms but which bits to dump? And does still being the biggest by revenue (just) guarantee a hearing from the biggest clients? It’s worth noting that WPP still has a sizeable debt mountain (£3.6bn.)

IPG, as Interpublic, was the first big ad holding company, based on McCann and other long defunct agencies such as Wasey Campbell-Ewald. Sir Frank Lowe’s Lowe Group was briefly the jewel in its crown around the same time as that other knight of the realm, Sir Martin Sorrell, was shelling out $4.7bn for Y&R (now subsumed into WPP’s VML.) IPG is currently trying to sell R/GA and Huge, big digital agencies that once seemed the future of holding companies.

There has, therefore, been a pretty impressive destruction of value at the hands of the holding companies. It’s not all their fault: nobody, apart from Sorrell, saw the existential threat from the social media platforms with their “walled gardens.” His new S4 Capital was intended to be their essential handmaiden but that doesn’t seem to be ending well.

Back in the day Publicis and Omnicom tried to merge. It never looked that likely and, predictably, foundered on “culture” issues. But if ad holding companies are going to fight the platforms on one hand and the consultancy-owned likes of Accenture Song and Deloitte Digital then more supposed “rationalisation” may be in order. At the moment most of them, including WPP, don’t seem to have the firepower, being more focussed on cutting costs and offering libations to the gods of AI.

IPG’s big not-so-new idea, according to CEO Philippe Krakowsky, is more “principal-based” media trading. That is, reselling media to clients. Haven’t we been here before? Groundhog Day is not a very comfortable place to be.