This Is Not an Exit: You Are Now Entering the Post-Merger Era

For years, people have made sweeping declarations that the holding companies are over. Well, the holding companies aren’t going anywhere, but their role in the broader industry has certainly evolved. In 2014, Adweek questioned whether independent agencies could thrive in what it dubbed “the merger era,” a period of acquisition after acquisition that became a major marker of adland in the 2010s. The piece noted: “In 2013, the big six holding companies tallied 116 agency transactions—an average of about two per week.” Now, this trend has slowed as independent agencies assert their sustained value in the marketing ecosystem.

Independents had a strong presence on Ad Age A-List, which was announced in mid-March, with Rethink getting named Creative Agency of the Year. Consider Work & Co. too, which made the Agency Standouts list. The digital agency posted its third consecutive year of double-digit revenue increases, growing 33% to $146 million after a 23% jump in 2021 and a 14% increase in 2020. It increased its staff count to 550 and opened two offices last year, in Atlanta and LA, bringing the total count to eight locations across the U.S., Europe, and Brazil. Mischief serves as a similar example, getting named number one on Ad Age A-List in 2022 and number three in 2023. The agency boasts diverse talent, compelling creative work tapped into the cultural moment, and more. So, why aren’t either of these agencies hot targets for acquisition? Have the holding companies lost interest in acquisitions or have independent agencies? Who holds the power?

People often assume companies get created with the objective of selling. But advertising has always remained a bit different. Several founders consider their agencies an extension of themselves, and their personalities, and find it difficult to walk away from their creations – no matter the price. Last summer, Adweek Agencies Reporter Emmy Liederman developed an article on why independent agencies stay independent. The short answer? More freedom. Leaders want to call the shots on hires, maintain financial autonomy, and avoid brand conflicts that can arise within holding companies. The importance of these factors became especially pronounced at the height of the pandemic. According to Liederman’s article, “Full-service creative agency Fitzco bought itself back from IPG in 2020, and when the pandemic hit two months later, the shop wasn’t forced to lay anyone off…in contrast, IPG’s annual report showed it cut more than 4,000 jobs during the first year of the pandemic.” With that context in mind, perhaps acquisition has become less of a ubiquitous goal for independent agencies.

While independent agencies value avoiding the red tape that can come with holding company ownership, the reality remains that mergers and acquisitions play a crucial role in helping agencies bolster their skill sets. Take, for instance, Wunderman Thompson and VMLY&R. The formation of both agencies stemmed from mutual benefit and market need. Publicis pioneered this notion when forming its Power of One superstructure, allowing for cross-pollination across different brands. With all eyes toward AI, the Metaverse, and emerging technologies, how can independent agencies take a page from the holding companies, enhancing their capabilities and staying ahead of the curve without necessarily succumbing to acquisitions and losing their personal brands in the process?

I predict that, over time, we will begin to see more independent agencies merge together, maintaining a nimble, red tape-free approach while growing in scale and skill. Imagine the cultural sensibility of Mischief paired with the heritage of Wieden. Imagine the, well, gutsiness of Gut coupled with what Ad Age called the “insurgent creative style” of Atlanta-based indie Chemistry. The possibilities are endless.

By Sasha Martens