Services: Green Square

From Getty acquiring Shutterstock to Bauer buying Clear Channel and Publicis bringing together Leo Burnett Global and Publicis Worldwide, it’s been a busy start to the year for M&A. Green Square’s Tony Walford tells us what to expect in the weeks and months ahead. What a start to 2025! Trump back in, economic and political turmoil in the UK, France and Germany and the Middle East (but hopefully now resolved) and Russia-Ukraine continuing to present challenges, albeit Trump reckons he can fix the latter in a stroke. Given this background, it’s understandable to anticipate a slowdown in investment and M&A whilst people wait to see what the US administration will bring and also how the UK economy pans out. That said, hot on the heels of the Omnicom-IPG announcement at the very back end of 2024, this year started with a couple of significant acquisitions. Getty is acquiring Shutterstock in a merger that will value the combined company at $3.7bn and Bauer is buying Clear Channel Europe-North for $625m. Given current global macroeconomic uncertainty, the question is whether the nature of these three deals points to a potential trend in M&A for the coming year. While trying to predict this year’s theme so early on would only set me up to look a fool (no comments please), there is a common thread across these three transactions, which is consolidation. And as I write, the news of Leo Burnett and Publicis Worldwide coming together under the name Leo is reverberating – it’s not M&A, but it’s certainly consolidation. There’s been plenty of press comment around Omnicom-IPG and its proposed restructuring, so there’s no need to repeat that here. That’s consolidation in its purest form in an increasingly competitive and changing market… two legacy global networks huddling together to keep warm, cutting costs and aiming to knock Publicis off its recently claimed position as ‘Top Dog’ (while the Top Dog itself begins internal huddling together under Leo). So, let’s concentrate on the Getty and Bauer deals. First, Getty-Shutterstock is about controlling more of an already declining image market, protecting its position through cutting costs (estimated annual savings are up to $200m after three years) and facing up to the threat that AI image generation brings. The combined entity will control nearly half of the global image market with a massive library of approximately one billion stock images, videos, GIFs and the like. Image prices are being driven down, photographers are (sadly) being paid less and the market has become commoditised. On the face of it, this replicates the Kwik-Save store mentality of the 1980s, “pile it high and sell it cheap,” but generative AI tools, such as Midjourney and OpenAI’s Dall-E, are major threats to the traditional image market. Getty is not only trying to consolidate its position as the place to go by offering a broader and deeper content library, but wants to outpace competitors by developing its own AI-powered tools for image search, editing and generation. It hopes that its vast, merged combined repository will provide the biggest pool in the world to train its machine learning tools on. In comparison, while Bauer-Clear Channel is also about consolidating across media platforms, it’s not simply about size, market share and defensiveness. Bauer has a suite of media assets in magazines, including Grazia and Heat, and radio with Absolute, Magic and Kiss to name just a few. By adding out-of-home it significantly extends its offering to advertisers and the opportunity to seamlessly sell media across a broader set of formats. It’s interesting that in buying the North European elements of Clear Channel, Bauer has stuck to its local markets – those which it understands. It already operates in 7 of the 12 markets Clear Channel brings, so there’s a degree of risk mitigation, which brings me on to another point – trust. Trust in news media is being eroded. There’s a constant onslaught of political influence across the various news platforms, some much more biased than others. Not to mention Elon Musk using his own platform, X, to have a pop at the UK’s Labour government as well as Nigel Farage (who must be particularly sore, given his prior constant praise for the guy). With polar-opposite opinions and spins being put on our ‘news’, and out-of-context comments and fake imagery being broadcast globally, people no longer know what to believe. The cancel culture still exists, but people are becoming a bit more suspicious of the information that’s being doled out and less knee-jerky before making a decision. And if the public is trusting news media less and less, how does this translate into the trust people place in those brands that advertise on it? One of our Green Square client alumni, Jack Horner (formerly of FRUKT, which Green Square sold to IPG, and now a founder of local media specialist, Nearfield), suggests local media news is considered far more authentic. While it tends to be “local news for local people,” the proximity of the matters being reported means it’s far more likely that fake news will be called out and local news platforms are hugely at risk should they lose trust. When something major happens locally, for example the dreadful fires in California, I can’t imagine residents would choose CNN or Fox over the Los Angeles Times to get a more detailed picture of what is happening. In turn, this trust in local media can extend to advertisers. We all know brands must earn trust, but being seen in a place where authenticity already exists is a good start. It could be deemed smart to shift a more sizable element of advertising and events budgets to regional media outlets, allowing brands to connect and engage with local communities, in turn garnering more trust, loyalty and ultimately becoming part of their ecosystem. Out-of-home, or local radio, seem pretty smart places to be. Another fear for brands is one where their adverts appear next to inappropriate or extreme content. In a world where media trust is diminishing, has this risk shifted to brands potentially being seen as inauthentic depending on their media placement? Again, out-of-home, or local radio seem pretty smart places to be… As an aside, the LA Times is owned by billionaire entrepreneur Patrick Soon-Shiong, who also owns the San Diego Union Tribune and other California news outlets. He acquired them with the specific intention of bringing more “fair and balanced” news, representing all views and, in late 2024, he controversially prevented the paper endorsing a single election candidate (in this case, Kamala Harris). He also fired the entire board in his ongoing quest to “restore balance.” Whichever way you look at it, given the size of the readership, this is local media at scale. Coming back to the outlook for 2025, while in tricky times we tend to see consolidation, my wish-list for this year includes it being about restoring trust, particularly in media content. The purpose, ESG and diversity agendas have rightly had most prominence in recent times, but what use is purpose without trust? It will be a shame if this year ends up being mostly about consolidation in an increasingly unstable world. M&A should be all about gaining complementary skills and services, which improve and extend client offerings, not just offering more of the same. That’s boring. Bigger isn’t better. Better is better, and the best acquisitions are those that augment people’s lives in some way. I’d like to think as we specifically look toward content that shapes so much of our day-to-day decision making, trust and authenticity will be higher on the agenda when looking at M&A. Read more

Discussing the evolution of the business since its merging with the global consultancy, chief executive Chris Mellish outlines why Unlimited is only just getting started. UNLIMITED is riding the crest of a wave right now, and there are no signs of that slowing down anytime soon. The business has just picked up the McDonald’s customer relationship management account for the UK and Ireland, continuing a hot streak on the new business front. The group consists of integrated creative agency TMW, Walnut, UNLIMITED’s market research agency, B2B communications and content marketing agency, Nelson Bostock, and healthcare comms agency Health Unlimited. UNLIMITED is being integrated to scale Accenture Song’s Al abilities and underline its evolving creative credentials. Until early this year, a case could be made for the group being unintentionally one of the best-kept secrets in the advertising community despite it being 38 years old, employing over 600 people, winning numerous awards and working for clients such as the Cabinet Office, Canon and Vodafone. Last year, TMW alone won 24 pitches, totaling £7.9 million in new revenue, including Suzuki, Oak Furnitureland, People’s Postcode Lottery and Rail Delivery Group. But in April, things certainly changed when the group was acquired by one of the world’s largest business consultancies, Accenture, to become part of its creative arm, Accenture Song, which has heightened its new business pipeline even further due to its substantially strengthened offer. Tony Walford, founder of Green Square which handles mergers and acquisitions, describes the deal as having “a smart rationale” that will bring “specialist elements to Accenture Song’s broader offer.” Now, the group sits proudly alongside major agency names such as Droga5. Within just six months the acquisition has already begun to bear fruit having just won McDonald’s CRM account, something it would have been unlikely to have achieved without the collective might of its new parent company. Michelle Graham-Clare, CMO UK and Ireland for McDonald’s UK and Ireland says of the hire: “TMW demonstrated a true passion for our brand. Their use of customer data, strategic thinking, as well as creativity was exceptional and we look forward to utilising this partnership as a way to build world-class CRM that delights our customers at every touchpoint.”

Ambitious Leadership

Chris Mellish, group chief executive of UNLIMITED, sees the move as part of the leadership team’s collective drive to take on the traditional agency networks from which many of them have heralded. Mellish, who always comes across as a calm and approachable leader, has a great ambition for UNLIMITED’s progress. A former president of BIMA, Mellish has spent more than two decades developing digital marketing solutions. He joined the business in 2019 from Razorfish where he spent 14 years, to become the chief executive of TMW before being promoted to lead UNLIMITED last year. UNLIMITED has a clear point of difference, he believes, through its modern integrated offer alongside its deeper understanding of consumers through behavioural and neuroscience as part of its Human Understanding Lab launched in 2022. “Five years ago, we made the decision to put PhD-level thinking at the heart of everything we do and combine that with our unique perspective on integrating the customer journey. It’s really struck a chord with the market and we’ve seen an incredible period of growth.” That has been exemplified in Accenture Song being named on McDonald’s CRM Agency Roster, with TMW leading the pitch in the UK and Ireland, subsequently becoming the first agency appointed as part of the global roster review. Accenture offered scale and expertise to support the process, but TMW led on both creative and strategy. Mellish explains that the proposition around “true integration” was something he held a strong belief in when it came to delivering stronger customer engagement calendars “more inspiring” and integrated campaigns “more effective” for clients. Now, he feels that is self- evident following the positive response by the McDonald’s team. “This was our first opportunity to pitch alongside the rest of the Accenture Song, and it has demonstrated immediately the scale and potency that we have added to each other’s offerings,” he continues.

Break On Through

Debut campaigns for new clients have been released in recent months, showcasing an evolution in strength. That included TMW’s first work for Suzuki offering a very different type of car ad. Its campaign was designed to help the Suzuki Swift stand out against ‘increasingly formulaic ads’, presenting the different lengths that owners would go to just to keep the car from growing in popularity. The creative agency also supported the launch of on demand TV service Freely, from BBC, ITV, Channel 4, and Channel 5 and the “Enhance Performance, Legally” campaign for sports nutrition brand Bulk which proved deliberately provocative. Elsewhere, through its long-standing consortium with Pablo, the first campaign was released to help ‘humanise’ HMRC under the ‘You’re On It’ platform. Released in November, it highlights the British tax authority’s ambition to increase the number of users of its app to six million people. That consortium was also appointed to take on the Government’s key climate account earlier this year. Described as “The Breakthrough Agenda” it saw UNLIMITED beat out rostered agencies on the Government communications framework to be appointed as the agency of record for The Department for Energy Security and Net Zero‘s initiative, which aims to strengthen international collaborations around clean technology development and sustainable solutions. The brief includes website design and development, social strategy, and content creation and PR around key periods, managed by bespoke specialists across the network agencies, including TMWX, TMW Tomorrow and Nelson Bostock. Mellish believes that clients have bought into how it helps brands manage their communications efficiently and effectively through a simple ‘honed down’ approach that they understand, while the positive culture around the business that talked about driving performance and effectiveness also resonated. And now his challenge is to integrate that all within Accenture Song while building scale, without losing those core, appealing strengths. “Together, we are building a new agency model that enhances our ability to deliver comprehensive, elevated solutions that better serve our client’s evolving needs,” he states enthusiastically.” Mellish is relishing taking the offer and working alongside the established parts of Accenture Song to move beyond its UK-centric footprint and build further. He describes the breadth of the business as “enormous” – a word he also uses to describe the new opportunities. With Accenture’s backing, UNLIMITED has also considerably strengthened its technological capabilities. “The most topical example is probably AI, where billions are being invested, and the breadth and depth of expertise throughout Accenture is incredible. Since becoming part of Song, we’re now lucky to have access to world-leading experts across every specialism or technology you could ever think of.” Subsequently, Mellish is now part of the Accenture Song leadership team reporting into Sohel Aziz, the managing director for UK, Ireland and Africa.

Clear Signs Of Progress

The McDonald’s win is a clear sign of UNLIMITED’s progress as it competes for what Mellish sees as being “more innovative briefs” with the Accenture Song fold. He sees bigger brands and a bigger scale prove exciting for the team, with early evidence that the mix is working. “We’ve had a huge wave of success over the past few years, but we’re now working on certain briefs that we simply wouldn’t have seen before. It’s exciting thar our big ambitions have started to become reality almost immediately. McDonald’s is the perfect case in point. The response from staff has been amazing – our employee engagement numbers have got even better this year.” Speaking to Creative Salon when the acquisition was announced in April, Dame Annette King said that UNLIMITED had proven in recent years to be “one of the industry’s strongest offerings across the board.” She continues: “Their capabilities and expertise have driven incredible performance for their clients – all of which has been underpinned by a culture where people genuinely love where they work and are proud of the work they put out in the world. Their unique skill sets are complementary to what we already have at Song but what was evident from the outset was how these could be supercharged by what we do. Particularly when it comes to our Gen Al offering that we know is a central focus for clients everywhere.” Moving forward, Mellish intends to ensure that more brands experience the capabilities of the group. “We’ve already built an approach that drives both great creativity and real business results for our clients. With this bigger platform, I’m excited that many more brands will get the opportunity to see that firsthand.”  

2024 was bookended by two Omnicom deals – Flywheel in January and Interpublic in December – which got us all excited. Green Square’s Tony Walford explains why he expects a lot more M&A excitement in 2025. It’s been a relatively slow couple of years for M&A globally, with the UK and North America displaying a general trend of decline from the peak levels seen in 2021. That said, there’s lots to be positive about as we enter 2025. First, why the decline? In a nutshell, economic and geopolitical uncertainty. Inflation increased globally from late 2021 and continued to persistently rise and remained high (above 5% in the case of the UK) until recently. Central banks hiked interest rates to bring inflation back under control, leading to increased cost of debt, which the majority of acquirers rely on to finance transactions. Couple this fundamental financing stranglehold with major global conflicts, fears of a global recession, 2024 elections in the UK and the US, and an indication from the new UK chancellor that Capital Gains Tax (CGT) rates would dramatically increase, and you have the perfect storm. Buyers became more selective and offered lower valuations, with sellers reluctant to accept these valuations, particularly given CGT fears at the time. Whilst we saw a flurry of UK transactions closing prior to the budget, and some that missed the deadline completing shortly after, there has still been a significant reduction in deal volumes over the last couple of years.

Falling inflation and interest rates

So, what about M&A in 2025? The consensus view, supported by us at Green Square, is we’re in for a very busy year as we see the factors that drove the reduction in activity start to reverse. Most notably, inflation has reduced and thus interest rates are slowly coming down and this is expected to continue into 2025. Putting aside growth and political issues in France and Germany, the UK and US are seeing some recovery and economic optimism is improving, even though we are yet to see what the second Trump administration will do. Private Equity is sitting on a lot of cash which it needs to either deploy or give back to investors, with spending clearly being their preference. On top of this, PE firms typically hold investments for 3-5 years and, due to the relative lack of activity over the last couple of years, many are holding investments at the latter end of this timeline which they need to offload. Thus, we can expect to see plenty of PE disposals in the coming year. Then there are those agencies that wanted to sell in 2024 but decided to hold off for all the reasons stated above. Time waits for no one and, with the increase in UK CGT being lower than expected (at least for the time being), there’s a lot of pent-up shareholders looking to realize value. Put all this together and you have funding costs coming down, more businesses coming to market and the gap between buyer pricing and seller expectations narrowing. Hence our forward-looking positivity. In terms of our marketing services universe, we saw a diverse crowd of acquirers in 2024 with PE-backed outfits tending to be the most prevalent. The global networks were fairly quiet, focussing on infills where they lacked a specific skillset rather than statement transactions, aside from the just-announced Omnicom IPG, Valtech buying Kin+Carta, Publicis acquiring commerce specialist, Mars United, and LDC-backed MSQ doubling its presence in the US with SPCSHP. Management consultancies were also relatively inactive, with the exception of Accenture buying Unlimited.

Key M&A areas in 2024

Whilst the market was somewhat muted, certain marketing specialisms saw greater M&A activity in 2024, with key areas of interest as follows: PR. This was possibly the most active discipline for acquisitions with a mix of consolidation, disposals, MBO’s and new entrants. We saw WPP merge its Hill & Knowlton and BCW agencies to create Burson, whilst offloading its majority stake in FGS Global in a $1.7bn deal to KKR. Publicis acquired Influential, the world’s largest Influencer agency, whilst Havas also got in on the act buying the somewhat smaller Wilderness. Bully Pulpit (BPI) was a new entrant to the UK market, acquiring Seven Hills and Message House, making the UK BPI’s biggest European market and next largest outside the US and Public Affairs holding company PPHC bought UK government relations firm, Pagefield, another first step for a US firm into the UK. Healthcare marketing transactions didn’t disappoint and, despite some big pharma woes resulting in less marketing spend, transaction activity remained strong. This was primarily across the more scientific areas of market access and regulatory compliance, with PE-backed Clinigen acquiring Ascencian and Kinesys, but momentum remained across the more general medical branding and communications spectrum with some decent-sized transactions, such as IQVIA acquiring Ceuta, together with many smaller agencies including BioStrata and AKT also realizing value. Digital, as always, was another key area, the most notable deal being PE outfit ECI buying Croud from LDC, but we also saw MSQ buy 350-person German CX agency UDG. As expected, AI is fast becoming the hottest area with US digital engineering and AI enabler EPAM acquiring First Derivative, Blackstone-backed HH Global buying Northell Partners and Healthcare specialist Real Chemistry buying Avant for its AI-driven insights and marketing expertise. There were also many transactions across Social, Data analytics, Performance and e-commerce, all areas which continue to be in high demand. Events and Experiential has seen a significant bounceback over the last couple of years post-COVID as the smarter players shifted their proposition to digital alongside physical engagement during that period. There’s been high interest in areas which involve people interaction as brands strive to get ever closer to their consumers, be it B2B, B2C or D2C. 2024 saw PE-backed ImpactXM buy Matrex in the US and reach out to the UK for the first time in acquiring Enigma. This is a buyer to watch in the Experiential space as it looks to build out from its North American heartland. Stagwell continued its acquisition march, augmenting its experiential positioning in buying Sidekick (a Green Square transaction), and UK-based major Experiential independent, DRPG, bought North Carolina’s Special Events. Retail, e-commerce and Shopper has also had a resurgence, as indicated by the Publicis Mars deal mentioned earlier. We saw Acosta buying Dee Set, Product Connections and Crossmark, and Quad entering the In-store retail media market with its acquisition of DART. French Retail Marketing specialist, Altavia, expanded its overseas offering with acquisitions in Casablanca (D-Aim) and Singapore (ielo design). Read more

As the global ad industry adjusts to there now being five global advertising holding companies instead of six, Green Square’s Barry Dudley asks what the absence of words such as ‘advertising,’ ‘creative,’ and ‘strategy’ might tell us about where Omnicom is heading. Although there have been all sorts of rumblings and rumors for some time, Omnicom is actually going to acquire IPG – subject to regulatory approval. It is a ‘stock-for-stock’ transaction, meaning that IPG shareholders will sell their shares in exchange for shares in Omnicom. So, despite lots of heady numbers, no cash is changing hands. As the joint press release states: “Interpublic shareholders will receive 0.344 Omnicom shares for each share of Interpublic common stock they own.” Based on Omnicom’s share price at its last close ($103.43) this equates to $35.58 per share. IPG’s share price at its previous close was $29.26, so there has been a fairly hefty premium offered. The release went on to say: “Following the close of the transaction, Omnicom shareholders will own 60.6% of the combined company and Interpublic shareholders will own 39.4%, on a fully diluted basis.” This shows the relative sizes of the businesses. What did the markets think? Not unsurprisingly, IPG’s share price has jumped – initially to $32.90 and then settling back to $30.30 by the end of the day’s trading. Conversely, Omnicom’s shares closed the day down 10.25% at $92.82, taking around $2bn off its value. Is that because the market thinks Omnicom is overpaying, or it just doesn’t think it is a smart deal? Here’s what the respective CEOs had to say… “This strategic acquisition creates significant value for both sets of shareholders by combining world-class, highly complementary data and technology platforms enabling new offerings to better serve our clients and drive growth,” said Omnicom’s John Wren. “Through this combination, we are poised to accelerate innovation and harness the significant opportunities created by new technologies in this era of exponential change. Now is the perfect time to bring together our technologies, capabilities, talent and geographic footprints to bring clients superior, data-driven outcomes. We are excited to welcome Philippe and the entire Interpublic team to the Omnicom family.” His Interpublic counterpart Philippe Krakowsky put it like this: “This combination represents a tremendous strategic opportunity for our stakeholders, amplifying our investments in platform capabilities and talent as part of a more expansive network. Our two companies have highly complementary offerings, geographic presence and cultures. We also share a foundational belief in the power of ideas, enabled by technology and data. By joining Omnicom, we are creating a uniquely comprehensive portfolio of services that will make us the most powerful marketing and sales partner in a world that’s changing at speed. We look forward to working with John and the entire Omnicom team.” Picking out a few words and phrases – “highly complementary data and technology platforms,” “new technologies, data-driven outcomes,” “platform capabilities,” and “enabled by technology and data” – it’s pretty clear where they are planning to take the combined business, although I was quite surprised not to see a single reference to AI. Without doubt IPG’s Acxiom (Audience Solutions, Data and Decision Sciences) and Omnicom’s Flywheel Digital (Digital Commerce) are going to be central. While Flywheel is a relatively recent acquisition for Omnicom (2023), IPG acquired Acxiom in 2018 so it has been embedded into the group: “IPG’s OPEN architecture approach flexes to what brands need, bringing our wide capabilities across over 74 agencies with Acxiom’s Customer Intelligence Cloud capabilities to help brands and people, win.” And then a few words that are conspicuous by their absence: advertising, creative, strategy. There was mention of “innovation” and the “power of ideas,” but the bedrock brands that have stood front and center of these groups for many years appear to be heading to the back seats –BBDO, FCB, McCann, MullenLowe, TBWA et al. There were a good few mentions of the “talent”. IPG’s website claims ‘approximately 55,000 employees’ and Omnicom has ‘70k+ people’. By my maths that’s 125,000 in total. According to the press release, the ‘new Omnicom will have over 100,000 expert practitioners’. There’s quite a difference between these two numbers, which will be partly explained by non-practitioners, the back office. But the ‘annual cost synergies of $750m’ will undoubtedly involve a significant proportion relating to headcount reduction. That’s a pretty unpleasant thing to have surrounding you at this time of year. And where will the clients end up in all of this? They will undoubtedly have more tools, platforms and data to play with, but I can’t help thinking that client service is going to suffer. So as the mega groups morph towards wannabe Metas and Amazons, the opportunity for smaller players to emerge and capture the ear and the wallet of clients is going to grow, with a wave of people stepping away (or being jettisoned). I also expect to see some exciting startups emerge. My colleague Tony Walford wrote just a few days ago about Publicis becoming the biggest marketing services group by revenue. I wonder what Sadoun and Snoop Dogg have up their sleeves as their next move… WPP maybe? Read more

Publicis ends 2024 on a high as it becomes the largest holding company in the world for the first time in its history. Green Square’s Tony Walford analyzes why 2024 has been fantastique for Arthur Sadoun and his team. Every year Publicis’ inimitable CEO Arthur Sadoun puts out a pre-Christmas short film to all staff thanking them for their global contribution called the “Wishes”. It’s quite something, and 2023 saw each of its 100,000 staff being sent a personal video created in AI with Arthur featuring his digital twin. Yesterday saw the release of the 2024 “Wishes” in which Snoop Dogg, or “Le Snoop” as he rebrands himself in the piece, announces Publicis as global Top Dog. The end of this year is very likely to see Publicis as the largest agency network in the world, with its €13.9bn revenue forecast edging ahead of WPP, which has worn the global revenue crown for the last couple of decades. The film is very amusing. The French love Snoop, so this is a smart choice particularly on the back of the Olympics, and features Sadoun unsuccessfully trying to do the C-Walk, ending with a cameo of former CEO and industry legend, Maurice Levy, on a balcony showing everyone how it should actually be done. Sadoun is a very charismatic leader, as was Levy before him, and his enthusiasm is always a joy to watch (even in boring old investor presentations). But putting that aside, how did Publicis achieve this lofty height historically dominated by WPP for so long? The first thing that sprung to mind was a piece I wrote in a coffee bar in Amsterdam back in 2018 (the morning after giving an evening M&A seminar for The Drum) about how Publicis was leading the charge by simplifying its offer around the “Power of One”. It’s funny how specific moments and places in time trigger a memory and, given where I wrote it (which was after a very late night with The Drum team), I was a bit worried how it would read when I went back to it today! It finishes with the line “Power of One seems to be not just another vacuous corporate restructuring exercise, rather a genuine attempt to create a new model that will see the whole group face its clients in a very different way going forward”. Fast-forward six years (me with a lot less hair, but Arthur only shifting from black to grey), and it’s clear this focus has paid enormous dividends. Don’t get me wrong; all the networks have embraced the need to change how they operate, with Mark Read at WPP being particularly voracious in merging the biggest agencies in that group, but Publicis was at the forefront of this paradigm shift. However, it’s one thing to talk about the Power of One, and another to deliver it. And is this why revenues have grown so much? M&A has actually played a major part, with Publicis making several very large strategic acquisitions to strengthen its position in key areas. A significant moment was the $4.4bn acquisition of Epsilon in 2019, bringing the group valuable consumer data and AI capabilities which have become a fundamental part of Publicis’s offer. This sizable deal followed its bold $3.7bn acquisition of Sapient in 2015, which it merged with Razorfish (remember that?), to create Publicis Sapient and kickstart Levy and Sadoun’s “Power of One” strategy. While this year has been relatively quiet for holding company M&A, with PE-backed outfits and the challenger group Stagwell being more active, 2024 saw Publicis make two further significant moves. The first was its acquisition of Influential, the largest global influencer marketing company by revenue, giving it access to over 3 million creators and 90% of global influencers with more than 1 million followers. Publicis immediately started integrating its own data with Influential’s platform to offer more targeted and effective influencer marketing solutions with its press release stating “By combining our Epsilon data, which allow us to see 2.3 billion people around the world, with connected TV, commerce, and now creators, we can enable our clients to truly know and understand their customers and prospects, and engage with them on a one-to-one basis, wherever they are, both online and offline”. The second was the acquisition of Mars United, the world’s biggest independent commerce marketing agency. Retail media is currently one of the hottest areas in marketing, with Next15 lauding its retail specialist SMG (which I’m proud to say was a Green Square deal), as a bit of a savior in what has otherwise been a very difficult year for that group (but that’s another story). Publicis’s acquisition of Mars in September completed the holy trinity of data, targeting and effective retail media deployment for Publicis, and further cemented the Power of One philosophy. From the press release: “The combined forces of Publicis Groupe and Mars will allow clients to influence the complete commerce journey for billions of global Shoppers, through an offering that begins with the industry’s deepest and richest database of consumer & shopper behavior and ends at the digital and physical shelves of the world’s leading online and offline retailers.” Thus, Publicis’ rise to become the world’s biggest agency group by revenue has not been entirely organic but facilitated by some very substantial acquisitions. That said, Publicis has not engaged in acquisitions simply for the sake of size, it only made a handful in 2024, and they were smart. Sadoun has absolutely stuck to his strategy of bringing a single point of focus for all Publicis’ clients’ needs and, given Influential and Mars only happened in the second half of this year, their further integration in 2025 should bring the group even more global blue-chip client opportunities. This is the first time a French agency group will be the world’s largest. France is currently suffering significant economic and political turmoil, and I wouldn’t be surprised if Emmanuel Macron hasn’t already called Sadoun to thank him for bringing this glimmer of Christmas light! Looking forward to 2025, Publicis’ holistic offering, scale and clear positioning put it alongside the highly acquisitive Stagwell and the soon-to-be-decoupled and separately listed Havas as the most interesting groups to watch next year. Read more

The numbers were looking good for the agency network halfway through 2024, but has it managed to keep momentum moving in the right direction? Our number-cruncher, Barry Dudley of Green Square, suggests not. At the half-year point, I sensed that momentum may be picking up at Dentsu. Unfortunately, the Q3 results don’t seem to show this, with just 0.3% organic growth in net revenue and the guidance for the full year being moved down to “circa 0%” from 1%. But this does mean two quarters of (marginal) growth, following declines in the previous five quarters, so it’s at least momentum in the right direction. Japan, Dentsu’s biggest market by far, saw “solid” organic growth (2.8%) driven by double-digit growth in internet media. EMEA was up a healthy 6.9%, but this was largely down to the comparative quarter in 2023 being hit by a “one-off negative impact.” Americas, its second biggest market, was down 3.1% and “the situation in APAC remains severe,” declining 11.6%, with ‘difficult market conditions” in Australia a key factor. Hiroshi Igarashi, president and global CEO at Dentsu, said: “We have seen notable global new wins in the quarter, higher pitch win rates in Japan and the steady accumulation of net wins in the media business in international markets, which is the result of our continued effort to deliver Integrated Growth Solutions. These are examples that prove the implementation of One Dentsu is affecting positive changes within our organization. “Over the last nine months, we have made internal investments around data and technology, people and culture and business operations to accelerate our competitiveness.” Undoubtedly, some of that technology investment would have been in AI, although AI was not referenced once in the whole of the press release and only three times in the 52 page Earnings Presentation. But I did find this comment: “Creative won a significant global pitch in Q3 where we were able to demonstrate synergies with Tag, especially on creativity and efficiency.” Synergies and creativity are not traditionally the best of bedfellows, but perhaps it’s that pesky AI at work… Dentsu’s next Mid-Term Management Plan is set to be announced in February 2025 and it says that “under One Dentsu [it] will achieve growth that outperforms the global market by 2027” and “the plan will cover specific business strategies to recover competitiveness.” Sounds like one hell of a plan. Looking forward to reading that. Read more

One is in high spirits thanks to accelerating growth. The other has seen its share price tumble to a record low. As Stagwell and S4 post their Q3 results, Green Square’s Barry Dudley examines the reasons behind their starkly different performance in his regular holding co results round-up. Off the back of a 13.5% decline in net revenues in Q2 comes a like-for-like drop of 12.6% in Q3 for S4. No wonder Sir Martin Sorrell, S4’s executive chairman, had a somewhat dour demeanor during his firm’s earnings call. Global macroeconomic factors, including high interest rates, were referenced. But S4’s fundamental challenge continues to be its dependence on technology clients with one client in particular pulling down its results. The outlook has been revised down to a low double-digit reduction in full-year year like-for-like net revenue – so down at least 10% against 2023, when put in plain English. Which is going to lead to a “significant reduction in the number of Monks.” Staff, that is. The Content division, S4’s largest, saw a drop of 9.1% in net revenues for the quarter. Data & Digital Media was flat, but Technology Services was down a thumping 42.1%. And by geography: Americas were down 14.5%, APAC down 21.2%, with EMEA up slightly by 1.3%. Scott Spirit, S4’s chief growth officer, talked through its “addressable market,” which I thought would add further color to why it is finding trading so tough… in 2024 ‘digital media spend’ is forecast to be up 8.7% (7.8% in 2023) and ‘ad revenue growth at the 5 main platforms’ is forecast to be up 15% (10% in 2023). Sounds like a pretty good addressable market to me! However, ‘Digital Transformation Service’ is projected to decline by 0.25% (compared with 5.2% growth in 2023). But the most fascinating numbers were in a table that showed the number of clients S4 had in four different size bandings for the year 2024 and for the same period in 2023. In 2023, there were 12 clients with revenues of more than £10m and 12 clients with revenues of between £5m and £10m – in 2024 the respective number of clients were nine and seven. As I’m pretty sure S4 hasn’t lost (m)any major clients, so that means there has been some sizeable cuts in spending. What is possibly more troubling is the picture at the other end of the scale: clients with revenues of between £0.1m and £1m have increased from 349 in 2023 to 390 in 2024. In tricky times, it is not unusual for businesses to take on smaller clients, or smaller projects than they might normally wish to in order to fill a sales gap. Sometimes this can also be the wrong type of work. There may simply be no choice: bills have to be paid. But this can create a vicious cycle where your resources are used inefficiently across too many things and then you don’t have the capacity or the right mindset to start working on converting the next £10m+ whopper. Spirit went on to say: “On the positive side our progress in new business, particularly driven by interest in our Monks.Flow AI offering has helped drive an increase in clients at the top of the funnel which we hope to develop into larger relationships in 2025”. Fingers crossed. Then there was Stagwell, with its waxed surfboard. If S4 has the challenge of its dependency (44% of revenues) on the Technology sector, Stagwell has the upside of a strong Advocacy practice which benefited from a US election that supposedly saw a combined cost of $3.5bn around the Trump and Harris campaigns. Stagwell’s Q3 organic net revenue growth was 7.6%, or 4.6% if you exclude advocacy work. All of its ‘principal capabilities’ saw organic growth with Stagwell Marketing Cloud Group up 23.3% and Digital Transformation up 14.5% – the latter a particularly stark contrast to S4’s fortunes. If the US, organic net revenue growth of 10.8% was helped by the election. I suspect the UK’s decline of 10.1% was due in part to clients holding back spending whilst they waited to see the outcome of the recent budget. ‘Other’ was down 0.9%. Mark Penn, Stagwell’s chairman and CEO, said: “The third quarter results show us returning to industry-leading growth. We believe we are poised to deliver double-digit growth in the fourth quarter and will be well-positioned for 2025. We are reaffirming our full-year guidance today after a more moderated start to the year. We are accelerating into the back half. Our new business momentum continued as we won our single largest deal to date with a global tech company and have expanded our work with major tech companies this quarter by 30%. Our tech company relationships have come back strongly. We posted a net new business figure of $101m, bringing our LTM new business to $345m, another company record. This was driven by a new business pipeline, and increasingly larger global pitches”. One of the share prices dropped 15.86% during the trading day of the announcement, the other jumped 2.95% – I’ll leave you to guess which was which. But I know which chairman I would rather have had a cup of tea with after these announcements…

The UK has been waiting 14 years for a Labour budget and, as expected, a rise in employers’ national insurance has stolen many of the headlines, but there was much more. Green Square’s Tony Walford asks if agency leaders are in for a bumpy ride in 2025 as a result. This afternoon, a client compared the budget to one of those fairground ghost trains where you’re promised an absolute bedlam of horrors but, once it starts rattling along the track, it’s all a bit lame. I have to say she was bang on the money, but there were still some nasty twists. The first thing that’s quite irritating is that in scaring folks by largely keeping schtum on what would happen regarding capital gains tax (CGT) and inheritance tax (IHT), while promising no rises in income tax, corporation tax and VAT, Rachel Reeves led a lot of business owners and individuals to take major life decisions in the short term based on conjecture. Last month, in a piece in The Drum, I countenanced against agency owners and shareholders taking a discount to close a sale pre-budget in case the hit to CGT wasn’t as bad as expected. It had been mooted that it could be aligned to income tax, so worst case 45%, but today’s hike from 20% to 24% for higher and top-rate taxpayers is right at the bottom end of expectations. Business asset disposal relief (formerly entrepreneurs relief), which gives qualifying business shareholders a reduced tax rate of 10% on the first £1m of gains, is being held until April 5, 2025, when it will rise to 14% and 18% in 2026. Those that sold quickly and at a chunky discount may rue the day, but I don’t write this with a smug ‘I told you so.’ The government fueling expectations of a Halloween horror-show budget with many being plunged into the depths of hellfire, when in reality it’s a few burnt marshmallows around the fan heater, is a very poor show. The lack of transparency was pitiful and the cynic in me would think it was done on purpose to drive the tax grab up between July’s election result and today’s budget through fear, with the huge time period between the two cementing this conspiracy theory further. The good news is we now know what the rates are and, as it’s not that bad, we don’t foresee a big impact on agency M&A or ongoing investment. Indeed, those qualifying shareholders in a sale process will still save £40,000 in CGT if they get it closed by April. Those in private equity firms that invest in the companies they fund personally will see a relatively modest rise of 4% in their CGT rates. – again, not ridiculously penal, and I’d like to think it won’t impact investment. The real kicker for all businesses however, and particularly smaller ones already struggling with staff costs, is the increase in employers’ NI and the reduction in the threshold from next April. Businesses currently pay employers’ national insurance of 13.8% on every employee’s salary once their salary exceeds £9,100. This is a direct cost of employment and the increase in employers’ NI to 15% (and threshold reduction to £5,000) will have a direct impact of at least 1.2% on the total salary bill of virtually all businesses that employ staff. There is some light for businesses that have four or fewer employees on the national minimum wage who will get an additional £5,000 relief, but this is unlikely to be of any comfort to the vast majority reading this piece. Staff costs are an agency’s biggest single expense line, with a key ratio being staff cost to revenue and the golden target being somewhere between 55% and 60%. Many agencies have been struggling to even get down to a ratio of 60% in recent times, particularly as salaries have gone up with the cost of living while clients have pushed back on fee increases. This additional levy is very unwelcome and if firms can’t pass the cost on to their clients, they will need to find savings in the form of reducing discretionary spend. This could include agencies revisiting their own marketing strategy, holding recruitment, cutting various internal budgets and, in the worst case, reducing headcount. On a macro view, clients will also be suffering the NI increases and the broader impact of higher staff costs and resulting lower profitability could lead to reductions in marketing budgets. These are often the first to be cut in tough times and last to be reinstated when things improve and will be a double-edged sword for all of us in the marketing industry. There were other changes, of course, but the employers’ NI twist in the ghost train track is the one with the biggest capability of spilling a lot of folk from the carriages. Let’s see how the upcoming impact pans out as we head towards the next tax year. Read more

With Halloween just around the corner and the IPA’s latest Bellwether talking of ‘stagnating’ marketing budgets in the UK, a fearless Barry Dudley of Green Square looks at Omnicom, Publicis, Havas, IPG and WPP’s Q3 results to see what horrors lie within. Both Omnicom and Publicis released their Q3 results last week and, despite some pretty mad things going on in the world right now, I’d say they are pretty good. Omnicom reported organic growth of 6.5% with revenues of $3.9bn, up from $3.6bn in Q3 of 2023. Key to this were a 9.4% increase for Advertising & Media and a very impressive 35.3% jump in Experiential. The Healthcare and Branding & Retail Commerce disciplines struggled, however, with 1.1% and 5.4% declines respectively. The latter is surprising as retail has been a hot area of late, with agencies such as Next15’s SMG roaring ahead. All geographies saw growth of between 6.5% (US) and 24.8% (Middle East & Africa), except for Other North America at 1.5% and a decline of 0.2% in the UK. This UK performance probably reflects the recent findings by the Institute of Practitioners in Advertising that said that many companies were ‘pressing pause’ on their marketing budgets ahead of the government’s budget next week. Publicis also delivered a strong performance in Q3, with organic growth of 5.8% to €3.4bn, up from €3.2bn in Q3 of 2023. Chairman and CEO Arthur Sadoun said: “Once again, we were able to gain market share by capturing a disproportionate amount of client demand for personalization at scale, with our combined media and Epsilon activities growing at almost 10%. All of our regions delivered strongly, with the US at +4%, Europe at +4.9% and APAC at +6.4%, with China accelerating to +12.4%”. Despite the “increasingly challenging macroeconomic environment,” Sadoun is maintaining his typical bullishness by upgrading the full-year organic growth guidance to at least 5.5%, up from 5%. Publicis was also on the front foot with its M&A activity, spending a tidy $1bn during the quarter on acquiring Influential, an influencer marketing platform, and Mars United Commerce, a commerce marketing company. Interpublic Group (IPG) released its results this week, with organic revenue ‘unchanged’ at $2.63bn from Q3 2023 ($2.68bn) – so quite some way behind Omnicom and Publicis. And the outlook for the full year also remains largely unchanged, with CEO Philippe Krakowsky commenting: “Looking forward, we are seeing a strong new business pipeline, for both Q4 activity and longer-term AOR opportunities, and we remain focused on achieving organic growth of approximately 1% this year.” Although this 1% is at the lower end of the 1% to 2% in previous guidance. In terms of regional performance, IPG’s strongest market was Latin America, with 9.8% organic net revenue growth. But its biggest market, the US, saw no growth, while Continental Europe was up 0.6%, UK down 0.7%, Asia Pacific down a lumpy 7.4% and All Other Markets were up 1.5%. That seems like there are quite a few headwinds in quite a few places – I’d hazard a guess that the upcoming US election is a factor for that geography. In times gone by, it could have been the likes of R/GA and Huge to bring bright news for IPG, but both are now ‘held for sale’ with conversations, according to Krakowsky, “a good way down the track.” Next up was Havas, reported within its parent company Vivendi’s results. Yannick Bolloré, chairman of Vivendi’s supervisory board, and Arnaud de Puyfontaine, CEO of Vivendi, said: “Vivendi has reported strong growth in the first nine months of 2024. The revenues of the Group increased by 4.5% at constant currency and perimeter compared with the same period in 2023. Canal+ experienced revenue growth across all of its activities. The performance delivered by Havas was particularly driven by Havas Media and the Europe and Latin America regions.” They subsequently added: “These performances confirm the strength of our main businesses and their capacity to become independent if the shareholders’ meeting convened on December 9, 2024, approves the group’s proposed split project.” A confident message around Havas and its potential independent stock exchange listing in the future. This seems a little at odds with a 2.3% organic revenue decline in Q2 and a 3.5% decline in Q3 against the corresponding periods in 2023, but a Q3 decline was forecast in Q2 mainly due to a ‘partial loss of a big client in the US.’ The hope in Q2 was for a return to organic growth in Q4 or maybe in 2025. Let’s see! Europe and Latin America had solid organic growth at 2.8% and 12.1%, respectively. Asia-Pacific and Africa declined 0.6% and, much like IPG, North America was a challenge with a 7.5% decline. But there was no slowdown in the Havas M&A team adding Hotglue, an Aussie ‘media agency and creative production company’ and DPMG in the UK, an ‘Adobe top 3 recommended independent agency.’ And then there was WPP. Mark Read, CEO, said: “Our third quarter delivered like-for-like growth in net sales, with a strong performance from GroupM in particular. We saw growth in North America, Western Continental Europe and India, though trading in China remains difficult.” He went on to say: “We are encouraged by progress during the quarter, but with recent new business wins primarily impacting 2025 and continuing macroeconomic pressures, our expectations for the full year remain unchanged.” An interesting point for me was the 7% growth in Q3 for its top 10 clients. Winning new clients is the lifeblood of the agency world, both for the maths as well as the excitement and challenge for the talent, and we regularly tell the businesses we work with that their existing clients should be the number one business development opportunity. More results are still to come and I expect the variety of fortunes to be extended further! Read more

There have been a lot of headlines recently around agency reorganizations – think Omnicom, Monks, Deloitte and IPG. Green Square’s Barry Dudley raises some questions that, as we approach the end of the year, agency owners should consider asking themselves. Earlier this week, I was caught by the headline of an article in another revered media business, the FT. It read, “PwC to embark on ‘unsettling’ overhaul.” Having spent some years in Andersen and then Deloitte through the dotcom boom and bust of the late 1990s and early 2000s, I have a lingering fascination for that world. I was expecting the piece to be about another round of redundancies – all of the Big Four accounting firms have been reorganizing and making cuts in recent times. There are indeed 2,700 staff and partners affected by the reorganization, but that doesn’t necessarily mean they will become redundant. So, what’s going on and what food for thought might there be for us in the creative, media, production and tech worlds? This is a UK-only initiative, led by senior partner Marco Amitrano and managing partner Laura Hinton, that is going to “simplify” the business and “reduce duplication.” As any business evolves, it encounters more and more complexity, which can sometimes add unwanted fat that goes unnoticed. Perhaps as a result of growth and absolute size, perhaps as it extends its offer, right through to handling things such as how WFH is built into operations.  

Food for thought 1

When did you last step back from your business to consider whether a reset or reorganization might be needed to perhaps simplify or rethink layers that may have started to make things harder, not easier? Another of the objectives was to “create scale and increase our market impact.”  

Food for thought 2

If you were to carry out some sort of review, what would the levers for scaling and creating market impact be? It’s relatively easy to look for places to cut costs; what’s not so simple is finding new ways forward that take the business to another level, turning the fat into muscle. Hinton told staff, “I know that, for some, change can feel energizing, while for others, it can be unsettling.” With the creation of six new teams, including a standalone ‘digital delivery unit’ covering tech, innovation, AI engineering, cloud and data, it sounds as if there is going to be quite a bit of nervousness for many people.  

Food for thought 3

What lessons did you learn from how your staff reacted the last time you added a new dimension to your business and changed old ways for new ones? Change is never simple, but when the term AI creeps into the mix, it will almost certainly make some mildly terrified – it needs to be planned and confidently managed.  

Food for thought 4

This is a repetition of a food for thought in a piece I did on Next 15 and S4’s results – Whether you think AI is going to turn things on their heads or it’s going to just be something that makes your existing business a little more efficient, you have to have a view. And you have to demonstrate knowledge and confidence around AI to your clients and prospects, not least because they are likely to know less than you!   PwC is clearly going on the front foot with this! So, AI can’t be ignored, but for me, humans possess magical and unique creative capabilities that will never become automated. Jo Bacon, the new Group CEO of M&C Saatchi UK, summed things up really well when she recently spoke to The Drum: “At the end of the day, I think creativity is human; there is a human element to all creativity. AI is an idea that humans have had to train, so a truly original idea cannot be created by AI. “AI does have an important role in any agency’s future, but I think it will be used as an efficiency tool for production and an effectiveness tool; it’ll never be trained to replace human creativity. It doesn’t have that human edge to have an emotional conversation. Of course we’re investing in AI, but we have a lot of great creatives that are still writing great content and great stories. Excellent storytelling is still very much at the heart of what we do here.” Read more