As much as the story has generated a lot of buzz, I find the news of Omnicom’s acquisition of IPG to be unsurprising and part of the natural order.

I am sad for the great agency legacies that will be mothballed. I am sad for the jobs that will be cut. I am sad that the holding companies do “innovation light” relative to digital and technology companies. I am sad that the holding companies have become, in finance terms, “cash flow plays”—like laundromats, car washes, and apartment buildings.

This cynicism toward holding companies has been earned. I started in this industry back in 1989 and have worked across five eras of the agency business, serving clients across TV, digital, performance, data, and now the AI era. Earlier in my career, I worked at IPG and reported to then-CEO Phil Geier, an experience that gave me a front-row seat to the inner workings of a holding company at its relevancy peak. At that time, the holding companies had grown for years by increasing their traditional media billings. It was an arms race, and it was all about rolling up agencies and media dollars globally.

Then the game changed, and the music slowly started to stop. In 1998, Google decided to bypass the agencies, and Meta followed their lead. Since then, the holding companies have been forced to milk the existing model.

Unfortunately, they did not have the market cap or the margins of the digital or software companies, so they have never been able to compete for the best technology people in the world. They never really had a shot at true innovation.

AI and the accelerating shift to in-housing

Adding to this problem, two other forces have accelerated their decline.

First, as we all know, clients today are increasingly bringing capabilities inside to save money, improve speed, and increase quality. The fact is that most large clients have internal agencies that proudly believe they can execute as well, if not better. Competition no longer comes from other agencies; an agency’s biggest competitor is its own client. These trends around client in-housing have hit the fee structure hard and made these big agencies more project-based—further weakening their once powerful stocks.

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