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Judging by the reaction to the news from Omnicom planned acquisition of Interpublic Group near the end of 2024 is strongly expected to expand in 2025 the largest agency groups. Size and scale will be essential for them to compete with each other.
But getting that big means looking to the biggest multinational marketers who need that global power to execute their media—the P&Gs, Coca-Colas, and General Motors of the marketing world. Together, they make up a large portion of media spending.
And that leaves a whole world of smaller and mid-sized marketers on the fringes of the holdco game – the “Forgotten Middle,” as one independent media agency executive coined it – looking for agencies to bring their A-teams and innovative solutions.
On closer inspection, holdcos are building what appear to be closer to platforms than different agency listings – although to be fair, each holding company has its own differentiating elements from the others. One former CEO of a holding company’s media agency, who left in 2024 for a position with a smaller independent entity, described the effort at the holding company they left as trying to build a cookie-cutter model with all their agencies to optimize back-office efforts. . And that’s the kind of factor that helped them decide to fish from a smaller boat so that this leader who was talking in the background could more freely explain what was going on.
“With a cookie cutter model that’s still trying to build, you’re missing out on almost the whole thing [uniqueness] — you understand why they do it in terms of efficiency,” the former CEO said. “But it also just crowded out all the freedom of the agencies themselves. My former agency will no longer be an agency – it will be a gateway to a company [media agency] network.”
Marilois Snowman, CEO of independent Mediastruction and author of the phrase “Forgotten Middle,” said she gets RFIs from mid-sized marketers who are specifically looking for independents and away from cookie-cutter models.
“If you’re a mid-marketer, you still actually need quite a bit of human intervention from a media-buying perspective,” said Snowman, who defines mid-market advertisers as $5 million to $50 million in media per year. The ‘set it and forget it’ that often happens to mid-marketers working with holding companies is negatively impacting their business – hurting their business.”
Part of the problem is that holding companies don’t have the staff to handle the day-to-day needs of a medium-sized trader, Snowman added. “Some of these mid-sized brands want to optimize every day. And a smart person needs to know either ‘no, that’s too frequent’ or ‘yes, let’s go ahead and optimize there every day.’ And a holding company with their overhead just can’t afford that.”
The effect is already starting to settle. Dept’s global network of independent agencies won a tender against Lufthansa Group’s digital media holding companies in EMEA in mid-December, explained Andrew Dimitriou, the department’s global chief client and growth director.
“The world is more connected, so we need to be connected and interdisciplinary – holding companies are not,” said Dimitriou. “Technology has become the great equalizer. When you look at the barriers to entry in this business, they are lower because of technology. In the past you had to have a lot more infrastructure to enter the business where now everything is more accessible and affordable…. We don’t have legacy systems.”
David Dweck, managing director of paid media at Wpromote, believes independents will clean up in the coming year thanks to moves by several holding companies. “A lot of the business we take from holding companies comes from clients who are on the tail end [the Fortune 500]or even subsidiaries of massive conglomerates,” Dweck said. “They’re the ones who come to us because they’re the red-headed stepchild in the room. They won’t get good service or good teams. The time to market is very long. The level of sophistication they need isn’t there because they’re getting the D team.”
Dwec doesn’t see that changing in the coming year either – quite the opposite, in fact. “I think it’s only going to accelerate because if [holdcos] are focused on offshoring and artificial intelligence, even if they are talking about them publicly, the result will be that many of those clients who need a more strategic go-to-market strategy to launch new products or just keep up with trends in the space, you will be left behind and you’ll probably go look elsewhere.’
“They’re all going to be going after the same clients anyway, I think there’s one less holding company in the mix,” Dwec said. “It’s going to be a bunch of dinosaurs going after what’s left, and there’s going to be a lot of healthy scrap for the rest of us, because it can only go one way, which is going to be pressure on prices that will lead to client acquisition at a much lower threshold for delivery and talent . A race to the bottom just means they get teams that are offshore, less skilled, less well funded and probably have a higher turnover rate on the staff side.”