The recent announcement of the Omnicom-IPG merger, poised to create the world’s largest agency ecosystem, has generated buzz in the advertising and marketing world. As someone who has spent around 30 years in the advertising business and often spoken about the need for the agency ecosystem to transform, I watched this news with a mix of enthusiasm and dismay—enthusiasm for the potential it holds to reshape the agency world, and dismay at the possibility that true transformation might not even be a priority.
The advertising ecosystem has long grappled with one of its oldest mysteries: “I know half of my ad dollars are wasted, but I don’t know which half.” This phrase, attributed to John Wanamaker over a century ago, remains as relevant today as ever, even in an era of digital sophistication. Despite all the advancements in data and analytics, the question of how to accurately attribute ad spending to tangible business outcomes continues to stump agencies and clients alike.
Between 2000 and 2020, more than 30 major mergers and acquisitions took place in the global advertising space, including WPP’s acquisitions of Y&R and Grey Worldwide, consolidation of its media arms Mindshare and Media Edge, under Group M, Dentsu and Aegis Media and Publicis – Sapient. Yet, a report by Forrester in 2023 indicated that over 70% of clients feel agencies fail to deliver on their promised ROI post-merger. This data highlights the systemic failure of mergers to translate scale into value—a recurring pattern that undermines the industry’s evolution.
Omnicom CEO John Wren and IPG CEO Philippe Karkowsky |
The True Challenge Of Attribution
The global marketing attribution software market was valued at USD 3.1 billion in 2021 and is projected to reach USD 12.9 billion by 2031, growing at a CAGR of 15.5%. This explosive growth reflects a critical demand from brands to understand which touchpoints contribute most to their bottom line. The complexity of consumer behaviour has grown exponentially. With multiple generations of consumers—each with distinct mindsets and ambitions—brands must navigate a maze of preferences, touchpoints and decisions. Yet, even in boardrooms equipped with sophisticated data tools, the question of how each advertising dollar impacts the bottom line often goes unanswered. A 2024 study by Gartner corroborates this – 63% of marketers still rely on outdated models like last-click attribution, leading to skewed insights and wasted ad spend.
Technology and consulting firms have stepped into this void, offering business-outcome-focused solutions that agencies have struggled to provide. Clients increasingly turn to these firms, believing they will better deliver measurable results, while agencies are relegated to managing ad funnels. This limited role, if not corrected urgently, will further erode the relevance of traditional advertising agencies.
The Cost Of Myopia
The obsession with efficiency comes at a significant cost. According to a WARC report from 2024, global digital ad spend crossed USD 500 billion last year, but up to USD 120 billion was lost to ad fraud and inefficiencies. What’s more alarming? Over 40% of global advertisers admit that they focus more on achieving lower CPMs than on ensuring their campaigns drive meaningful customer actions. This misaligned focus highlights the urgent need to prioritise effectiveness over cost-cutting.
Connecting The Dots
Despite the advertising industry pouring billions into mar-tech, integration remains a glaring issue. A 2024 study by McKinsey found that only 27% of companies report having a fully integrated mar-tech stack, while 55% admit their systems operate in silos. Just as a minor example, I once praised the luxury hotel chain, Taj, on social media for its excellent service during check-in and received an instant “Thank You” (presumably from the social media team), only to receive a generic feedback request at check-out. This disjointed experience underscored how siloed systems prevent brands from building meaningful, ongoing conversations with their customers.
These inefficiencies also directly impact customer experiences and undermine loyalty. Brands that excel in personalisation see a 40% increase in customer retention, but those that fail at integration risk losing customer trust.
The Missed Potential Of Partnerships
The potential for collaboration in the advertising industry is vast but largely untapped. Consider YouTube, the world’s largest video advertising platform, which accounts for 13% of total digital ad spend globally. Yet, platforms like Channel Factory reveal that up to 20% of YouTube ads are misplaced due to poor contextual targeting, leading to lower performance and even brand safety risks. Agencies that leverage such specialised platforms could significantly enhance their offerings, yet discussions often remain confined to rates and discounts.
The Growing Power Of Tech Giants
While agencies scramble to find relevance, tech giants continue to consolidate their hold over advertising. In 2023, Meta, Alphabet and Amazon collectively captured 70% of incremental ad spend, according to WARC. These companies are not just ad platforms; they are data monopolies with a deep understanding of consumer behaviour. Google’s advertising revenue alone reached USD 224 billion in 2023, accounting for over 80% of its total earnings. If these tech giants decide to offer full-service agency capabilities, traditional agencies could face an existential crisis.
Consumer-Driven Narratives
Consumers today have become more influential than ever in shaping brand narratives. According to Edelman’s 2024 Trust Barometer, 81% of consumers believe they have more power to hold brands accountable than in the past decade. Moreover, with 53% of Gen Z preferring brands that align with their values, agencies and brands must co-create value rather than dictate it. Failure to embrace this consumer-first approach will render even the largest agencies irrelevant.
A Moment Of Reckoning
The Omnicom-IPG merger represents a critical moment for the advertising world—not just as a consolidation of power, but as a test of relevance in an industry at crossroads. Will this merger finally address the systemic inefficiencies, misaligned priorities and outdated mindsets that have plagued agencies for decades? Or will it simply reinforce the cycle of mergers that promise much but deliver little beyond the operational scale?
The stakes have never been higher. In a world where technology evolves faster than human habits and consumer trust becomes the ultimate currency, agencies must rise to the occasion. Transformation isn’t about acquiring new tools or gaining negotiating power; it’s about redefining the agency’s role as a true business partner—a co-owner of outcomes that align with client success.
This merger isn’t just an opportunity for Omnicom and IPG; it’s a wake-up call for the entire industry to reimagine its purpose and impact. The ad world doesn’t need another giant. It needs visionaries who can harness scale, technology and collaboration to drive measurable results.
The choice is clear: evolve or become obsolete. Let’s hope Omnicom-IPG chooses the former—not just to protect their future, but to inspire an industry that desperately needs transformation.
As the century-old question still lingers, perhaps the answer lies not in knowing which half of the ad dollars are wasted, but in ensuring that every dollar is spent with intention, clarity and accountability. The ad world is watching.
(The author is the Founder of Y&A Transformation and Strategic Advisor at Channel Factory)
