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The Rise of the Underdog: Why Holding Groups Won't Work for New Marketing and Media Giants As smaller, growing agencies are ramping up talent, resources and focus, they're landing equally impressive clients and fees — and signifying that agency disruption is already well underway.

By Kristopher Tait Edited by Micah Zimmerman

Opinions expressed by Entrepreneur contributors are their own.

Change comes. It may be glacial, or it may come at the speed of a raging forest fire. But it is inevitable.

And it could be that such an accelerated upheaval is headed for big marketing and media organizations that service global clients — what we commonly call the holding groups.

While I'd never label the existing "big six" holding groups as out-of-touch dinosaurs as there's much they do very well and admittedly much we can learn from them, whether they're a template for the future is up for grabs.

And the question is certainly one for now, given that there's a hungry new cohort of expanding marketing and media companies on the horizon. These "underdogs" are busy building up their talent, resources and focus. Oh, and they're also landing impressive clients and fees.

A changing of the guard may very well be underway

The huge amount of M&A activity in the past few years reflects this potential "changing of the guard." While M&A activity in marketing and media has slowed somewhat this year thanks to uncertainty caused by inflation and the war in Europe, among other things, in the first quarter of 2022, M&A transaction volume rose 19% quarter-over-quarter. It reached a peak in value over the past five quarters.

Stunning numbers, yes. But this also means that the acquisition groundwork has been done for independent agencies, particularly within digital and performance, to prepare to springboard into the big leagues… as long as they called the right shots, of course. I'd number S4Capital, Stagwell Group and PMG among the frontrunners, and I, for one, am excited to see what 2023 brings for each of them.

But if the new breed is going to come to the fore (and coming soon), how will they structure and organize themselves in a way which works best for clients, as opposed to what might work best for their own objectives? Because it's most assuredly the client-centric agencies that will win the work and the applause, as time and experience have shown.

Related: How to Find International Customers and Partners as Your Expand Your Market

For starters, clients don't want to deal with complexity

Yes, clients will always want sophisticated solutions to address the multiple challenges of a complex world, but they want to be able to access agency thinking, tools and talent quickly. These wishes won't be served by navigating numerous agency brands within a holding group and figuring out what each one "stands for" and its area of expertise. There's a saying about moving an oil tanker instead of a speed boat… nimble and light wins the speed race.

Clients will want one-stop shops that can quickly organize specialist teams to work on their specific solutions without any politics or internal siloes creating an obstruction.

To be fair, the holding groups have recognized this new reality. Consolidation has been a trend within the big groups, including WPP, Publicis and Omnicom, while S4Capital wasted no time folding all its acquisitions under the Media.Monks name in 2021.

But in the short term, these mergers — as absolutely no one likes to call them — disrupt operations as senior directors vie for top jobs, people look to their earn-outs, offices are relocated and maybe most importantly, different cultures try to align. All this distracts from servicing the client — no ifs, ands or buts about it.

Furthermore, the established networks also have the challenge of wrestling with departments set up to service legacy media, with teams and individuals often managing steady decline. Newer media businesses, on the other hand, can focus solely on digital solutions or build robust omnichannel teams from the start.

Read More: AI Is Considered the "Wild West" — Here's How Marketers Can Rein It In and Ensure Ethical Use

Herald the super-adaptoid

The future looks increasingly like one super-adaptive, agile agency that can operate at scale and is simultaneously equipped with best-in-breed tech stacks, an agency that can dial resources up and down as needed with flexibility woven into its fabric. The new generation will also wield the power of complementary AI and Machine Learning tools that remove a lot of the repetitive "grunt work" from operational implementation.

Certainly, size, as measured by staff numbers or by "buying power," is no barrier to winning the biggest client accounts. Just look at how independent media agency PMG outpaced holding company agency brands to carry off Nike's North American prize, ultimately being named integrated media agency of record and global digital capabilities partner. Big news. Big shoes (to fill).

Automation will give us the ability to increase particular efficiencies. Still, it's important to remember that we're service- and people- companies rather than tech businesses (perhaps the ones that adopt a tech mindset will flourish). All agencies contain valuable talent — it's just a question of how best to deploy that talent. Perhaps it's a matter of pulling talent from across departments and even locations to answer a brief or allowing talent — the freedom, even — to jump in and out of projects. Making the best use of employee expertise will be a challenge for all agencies, but as an industry, we're always finding new ways to stretch and excite our teams.

Undoubtedly, we'll continue to witness disruption in the agency landscape over the next few years, and there is a race to see whether the agency holding groups can evolve quicker before the underdogs can muscle up enough to grab more of their lunch.

Kristopher Tait

Entrepreneur Leadership Network® Contributor

US Managing Director, Croud

Kris Tait is Managing Director of Croud US and has been an integral part of the business, establishing Croud in the US by winning new clients, including St. George's University, Audible and The North Face, driving forward our service offering and delivering upon ambitious growth plans.

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