The agency holding companies are betting on AI, data and integration to stay competitive. Nick Berry, M&A Advisor to media & marketing agencies at Green Square, examines what independent agencies can take from that playbook and where they can build a stronger alternative.
Back in February, my colleague Tony Walford wrote an article in The Drum exploring why smaller agencies are driving much of today’s M&A activity. Since then, deal volumes in this area of the market have continued to accelerate, and demand remains high.
In the run up to Cannes, many across our industry of all shapes and sizes will be analysing and honing their proposition. It’s therefore timely to ask what independent agencies can learn from how the large networks have been repositioning themselves of late.
For decades, the holding companies appeared infallible, shaping the industry without question. But with increasing acceleration in recent times, the big global marcomms networks have been forced to redefine themselves to stay relevant.
Publicis stole a march through positioning itself as a platform based on its Power of One mantra and has benefited massively from first-mover advantage as a result. Since then, all the major networks have been scrambling to follow suit, placing AI, data and integration at their core, ahead of creativity.
WPP’s latest strategic plan presented in February, Elevate 28, aims to convince the markets that the once unstoppable Top Dog in the industry, has a credible strategy to stop its decline. Firmly at the centre of the strategy, it is noted that…“trusted data and intelligence; integrated solutions combining media, data, creativity and technology are fundamental to WPP’s competitive advantage”.
Others have taken a similar line including Stagwell, who launched The Machine, in January, described as “an AI-powered operating system designed to unify people, tools and data”.
At first glance, this looks like a category shift, from marketing services to technology companies. But that framing is misleading. These businesses are not becoming pure-play tech firms; they are responding to a fundamental change; whereby clients are no longer buying distinct outputs, but unified outcomes that require technology, insight and integration to deliver.
That distinction matters, because for independent agencies the real question is not, how do we mirror or keep pace with the big boys, but… “what is the underlying value we offer clients? And how do we strengthen our proposition, positioning and profitability through the smart use of data and technology?”
At Green Square, we spend significant time helping clients define their proposition and sharpen the clarity of differentiation. Against that backdrop, examining what independents can learn from the holding companies, and where they should distinguish themselves, is a useful exercise.
Independent agencies can’t (and shouldn’t) replicate the messaging of the networks. But elements of their strategic logic are transferable.
1. Organise around client problems, not capabilities
WPP’s “client at the core” principle sounds obvious, but it is difficult to execute at scale. Large organisations are restructuring to make this a reality. Independents, by contrast, are often already set up this way, and can deliver it more authentically.
That means:
- Listening properly to identify the real business challenge
- Structuring teams around client objectives, not internal departments
- Delivering solutions that cut across brand, performance, content and experience
This is often less about operations and more about intent.
In large organisations, senior involvement can be intermittent, whereas smaller agencies can offer consistent senior engagement, faster decision-making and a deeper understanding of the client’s business. That proximity directly improves client relationships, quality and outcomes.
2. Integration without bureaucracy
Across WPP, Publicis, and Omnicom, the strategic direction is clear:
- Break down silos
- Connect media, creative, data and production
- Use technology as the connective layer
Smaller networks and agencies can achieve alignment quicker, with fewer layers and less politics. What takes months for a holding company can take weeks, or days for a smaller, collaborative team. In effect, this is the “Power of One” without the friction.
3. Clarity of proposition, process and methodology will drive scalability.
As holding companies integrate, they aim to become more consistent with a simplified and uniform offering.
The risk to independent agencies trying to be full service is that they become indistinguishable in a race they cannot win and end up blending into the crowd.
Specialism is powerful. Agencies with a niche and clear differentiation are more attractive to both clients and acquirers. So, integration should enhance your specialist focus, not dilute it.
Where holding companies sell breadth, independents can win through:
- A clear proposition and strong point of view
- Depth in high-demand specialist areas
- Defined, repeatable processes and methodologies
- Demonstrating how ideas scale across channels, platforms and key cultural moments
The most valuable position to hold is not… “we do everything” but “we solve this type of problem better than anyone else”. This should be backed up and articulated through systemised, scalable workflows. It then becomes more valuable to clients and potential acquirers.
4. Data is foundational, not just a department
The big networks invest heavily in data infrastructure. Smaller agencies can’t match this, but they can still use data to gain advantage.
Access to data has never been greater. The shift required for many independent agencies is mindset: from seeing data as a way of reporting, to data being a foundational input.
From initial diagnosis through to campaign optimisation, benchmarking and feedback loops, data should underpin the entire client engagement and delivery cycle.
Even a lightweight, consistent approach creates advantage. It builds trust, improves performance and increases the stickiness of client relationships, all of which can be a significant value driver for potential acquirers.
5. Embrace transparency around commercial outcomes
A notable shift among the holding companies is a greater focus on measurable commercial outcomes.
Whilst the debate on charging for time versus defining the value of output has rumbled on for years, the power and potential of technology now tips the balance, presenting opportunity for independents.
It’s inherently easier for smaller organisations to be transparent, move quickly and directly link work to business impact. In many cases, they outperform larger organisations simply by being closer to the problem and reacting faster.
Clear alignment between output and outcome strengthens both relationships and client’s perception of the value received.
6. Use technology to enhance capability, not replace it
Cloud infrastructure, AI and automation have levelled the playing field. But how technology and tools are applied is often daunting and misunderstood by smaller agencies.
For holding companies, proprietary systems help coordinate complexity at scale and can lock clients into omnichannel platform ecosystems. Whereas, for independents, the goal should be to leverage tools and expertise to become a trusted creative and technology partner.
Becoming a true “partner” is the key to success, and independents tend to excel at embedding themselves into client structures to work hand-in-hand with their teams, particularly in utilising cutting edge AI tools and processes.
Brands struggle with the pace of technology change and what it means for consumer habits, so where independent agencies are agile, they help clients navigate these challenges using best in breed tools and repeatable, proven workflows.
However, independent agencies need to be careful of copying the language and appearance of holding companies.
- Overstating capability and positioning as an “AI-powered, data-driven agency” without substance can quickly erode credibility
- Equally, and even with AI advancement allowing rapid and effective software development, overengineering in-house systems and tools when best-in-class third-party software is available, is a risk
7. Maintain cultural sharpness
The scale and the consolidation taking place with the large network groups reduces their cultural sensitivity. This is an area where independents maintain a natural advantage through being able to:
- Move faster
- Take creative risks
- Iterate and experiment more freely
- Stay closer to cultural shifts and consumer habits
This is where distinctive, impactful and cost-effective work comes from. It is also what excites clients, who are under pressure to make brands stand out and perform.
The bottom line
There’s been much scepticism surrounding the holding companies’ direction of travel, but they must align with customer demands for simplified operational integration, accountability and technology-enabled delivery.
This convergence around scale, platforms and integration, means independent agencies and smaller networks are in a strong position, if they lean into their inherent advantages including having clarity of proposition. There’s a danger the holding companies’ offers will become commoditised and, with little differentiation, the choice comes down to price.
The goal is not to copy or try to be a smaller version of a holding company, but to become a better alternative.
In a fast-moving market defined by increasing complexity, the most valuable partners for clients and interesting M&A targets for acquirers are no longer defined by scale, but those that deliver tangible value through clarity, coherence and impact.
