In the world of advertising, a select group of companies known as the ‘big six’ have long held sway over the industry. These companies, namely WPP, Omnicom, Publicis, Dentsu, Interpublic, and Havas, have traditionally enjoyed a stronghold on major accounts, offering services ranging from creativity and innovation to advanced technology. However, recent developments have posed significant challenges to their dominance. This article explores the evolving landscape of advertising, including the rise of in-housing, the threat of management consultancies, and the resurgence of independent agencies. We also delve into how each of the big six companies has responded to these shifts, highlighting their distinct strategies and approaches.
The Challenge of In-housing and Management Consultancies
The big six media companies faced a turning point with the emergence of concerns regarding transparency and business practices. The 2016 ANA’s K2 report highlighted these issues, prompting many clients to consider bringing their media buying activities in-house. In-housing gained traction, especially with the growth of digital advertising, as major brands sought to gain more control, save costs, and address transparency concerns. Additionally, management consultancies, such as Accenture, PwC, IBM, and Deloitte, have entered the advertising arena, offering strategic and data analytics solutions to solve complex business problems. This incursion forced the big six to take notice and adapt to the changing landscape.
The Resurgence of Independent Advertising
Another notable development challenging the big six is the resurgence of independent agencies. These start-ups, supported by private investors, venture-capital funds, and private equity, have flourished across various sectors of the industry, from content creation and digital creativity to data-driven marketing. Clients, who prioritize diversity and seek a fundamentally different creative ecosystem, have fueled the growth of these independent agencies. The reemergence of creativity, often stifled by the big six, is becoming a defining characteristic of these new players.
Response Strategies of the Big Six
While change did not come swiftly, the big six have been gradually responding to the evolving landscape. Each company has adopted different strategies to adapt and differentiate themselves from their competitors.
- WPP: Founded in 1971, WPP initially began as a stake in a British manufacturer called Wire and Plastic Products. Over time, it transformed into a global advertising and marketing services group. WPP encompasses numerous companies, including AKQA, BCW, CMI Media Group, GroupM, Hill+Knowlton Strategies, Kantar, Ogilvy, Wavemaker, and many others. With a turnover of €16.719 billion and approximately 107,000 employees in 112 countries, WPP stands as the world’s largest advertising company. WPP has focused on streamlining its structure, consolidating its workforce, and investing in data and technology alongside creativity. By simplifying its offering, WPP aims to make it easier for clients to navigate. WPP has taken a unique approach to data by becoming a smart data user or ‘processor,’ instead of acquiring data companies outright.
- Omnicom: Omnicom emerged from the merger of two advertising agencies, BBDO and DDB, in response to the growing competition from WPP. The agency TBWA is also part of the Omnicom network. With a presence in over 70 countries and a portfolio of over 5,000 clients, Omnicom has achieved a turnover of €13.468 billion. Emphasizing its commitment to creativity, Omnicom believes that it is a core driver of growth. The company, founded by creatives, asserts that creativity cannot be acquired or sold, reinforcing its dedication to this aspect of advertising.
- Publicis: Publicis boasts a rich history that dates back to 1926. The agency gained prominence by pioneering the use of radio as an advertising medium and rapidly expanded internationally after World War II. Today, Publicis holds a position as one of the most significant agencies globally, with a turnover of €11.738 billion. The agency’s client portfolio includes renowned brands such as Renault, L’Oréal, and Nescafé. Publicis experienced lower-than-expected revenue in Q2 2019, indicating the challenges it faces. However, the company has been actively pursuing acquisitions and partnerships, such as acquiring data marketing business Epsilon. These endeavors cement Publicis as a data ‘controller’ and demonstrate its focus on leveraging data capabilities.
- Interpublic: Established in the 1930s, Interpublic comprises companies such as FCB, IPG Mediabrands, McCann Worldgroup, and MullenLowe Group, offering services in public relations, sports marketing, and talent representation. The IPG group has been recognized for creativity and media innovation, and it currently maintains a turnover of €2.766 billion. Interpublic has seen positive results, with a second-quarter net revenue increase and organic net revenue growth. Its success may be attributed to its adaptability and ability to navigate changing client demands.
- Dentsu: Dentsu, a Japanese company founded in 1901 as Nihon Kōkoku, specializes in international advertising and public relations. It has a broad client base across 145 countries and a turnover of €140 million. Dentsu has expanded its operations through mergers and associations, including partnerships with Facebook and commercializing the rights of major sports events like the Copa America. As a Tokyo-based company, Dentsu has been expanding its global reach and diversifying its offerings. By venturing beyond its traditional Asian market, Dentsu aims to compete on a global scale and cater to a broader client base.
- Havas: Havas SA, a wholly owned subsidiary of utilities and telecommunications giant Vivendi SA, is the largest publishing firm in France and a global media and communications company. Through an extensive network of subsidiaries, Havas publishes professional, reference, education, and consumer books in France, Italy, Spain, Latin America, and the United Kingdom. Havas, based in Paris, has focused on innovation and agility. By embracing new technologies and approaches, Havas aims to stay ahead in a rapidly evolving advertising landscape.
The Future Landscape
The second-quarter reports of the big six media companies show varied results, indicating that their strategies are yielding different outcomes. While some have experienced positive growth, others face challenges. In the short term, focusing on creativity and client deliverables rather than data acquisition seems to be resonating well with clients. However, the rise of in-housing by clients and the ever-changing nature of the industry pose ongoing uncertainties.
Final Thoughts
The advertising industry is experiencing significant shifts that challenge the dominance of the big six media companies. The rise of in-housing, the entrance of management consultancies, and the resurgence of independent agencies are reshaping the landscape. The response strategies of the big six highlight their efforts to adapt and differentiate themselves. Ultimately, the future of the advertising industry will depend on how well these companies navigate the evolving dynamics and cater to the changing needs of clients in an increasingly diverse and competitive environment.
