How Mergers and Acquisitions Are Reshaping the Advertising Landscape

The advertising industry, like any other, evolves with the times. Over the past decade, mergers, acquisitions, and consolidations have significantly reshaped the landscape, and these changes are accelerating. As a 28-year veteran of the digital advertising industry, with the experience of selling my company, Communicate 2, to Dentsu in 2012, and later serving on Dentsu’s Global Board of Investments and Acquisitions, I have seen the transformative power of acquisitions firsthand. This article explores how the dynamics of acquisitions in advertising are changing and what the future holds.

The Current State of Advertising Acquisitions
During my tenure at Dentsu, the company acquired around 12 firms in India and over 20 globally each year. I was deeply involved in several acquisitions and later integrated them as CEO of the Dentsu Aegis Network’s Performance Group. While these acquisitions drove short-term growth, the industry’s acquisition strategy is now due for a significant pivot.
To understand why, let’s examine two leading advertising groups: WPP and Publicis. A decade ago, WPP’s market cap far surpassed Publicis. Today, Publicis’s market cap is nearly three times that of WPP. Why? The difference lies in their acquisition strategies. While WPP focused on acquiring agencies to bolster its traditional media buying scale, Publicis made strategic acquisitions, like SapientNitro and Epsilon, that brought transformative capabilities in technology, first-party data, and digital expertise.

The Shift from Scale to Strategic Resources
In the 1990s, scale was king. Larger media buys yielded significant discounts, making size a competitive advantage. Agencies built empires by acquiring companies that added people and billings, mirroring how past empires waged wars to capture land and populations. But in today’s digital-first world, scale in media buys no longer provides the same edge. Digital advertising’s granular nature rewards expertise over volume.
The modern equivalent of capturing land is acquiring critical resources: technology, data, and talent. Publicis’s acquisitions of Epsilon and SapientNitro exemplify this shift. These acquisitions weren’t about adding headcount or billings but about gaining strategic assets that could reshape the company’s future. Conversely, WPP largely stuck to its traditional model of acquiring agencies at profit multiples, missing opportunities to future-proof its business.

Why Networks Must Embrace a New Acquisition Strategy
Advertising networks must rethink their acquisition strategy to remain competitive. The future belongs to those who acquire capabilities, not just capacity. As a member of Dentsu’s Global Board for Investments and Acquisitions, I advocated for a focus on technology and AI companies. Unfortunately, many service-oriented executives struggle to justify acquisitions at 30x revenue multiples when their own businesses trade at 12x profit multiples. This short-sighted approach ignores the transformative potential of strategic acquisitions.
The rationale is simple: if a $100 million acquisition generates an additional $100 million in competitive advantage and market value, the price paid becomes irrelevant. Yet, many networks remain stuck in an outdated valuation framework, focusing on EBITDA multiples rather than the broader value of differentiation.
The Consumr.ai Example: Data as a Strategic Asset
Take Consumr.ai as an example. This AI-driven platform integrates data from APIs of platforms like Meta, Google, Amazon, TikTok, DV360, and Snap. By providing actionable insights, it offers a layer of intelligence that could give advertising networks a significant edge. If an acquisition like this allows a network to outperform competitors across the board, what is that edge worth? Evaluating such an acquisition solely on revenue or profit multiples misses the point.
Similarly, the $90 billion market research industry is ripe for disruption. AI twins, like those developed by Consumr.ai, have the potential to revolutionize how insights are generated. If a market research firm could gain a dominant position through such technology, what price would be too high to pay? Should the valuation hinge on EBITDA multiples, or on the transformative value the acquisition brings?
Investing in Talent: The Aravind Perplexity.ai Example
Yesterday, I met Aravind Srinivas, founder of Perplexity.ai. His work in AI exemplifies the kind of talent advertising networks should prioritize. Imagine hiring a five-person team for $100 million. It may seem exorbitant, but if that talent gives your network a competitive edge, the investment becomes a no-brainer. Networks must start valuing talent and technology for the multiplier effect they bring, not just their immediate financial metrics. 

What Advertising Networks Should Acquire
The next decade will require advertising networks to acquire companies that bring strategic resources to the table. Here are examples of the types of companies they should target:
1. Influence Management Platforms: These help manage influencer campaigns, a rapidly growing segment of digital advertising.
2. Curated Influencer Platforms: Platforms that connect brands with vetted influencers, streamlining the influencer marketing process.
3. AI Tool Companies: From creative AI platforms to AI-driven media buying tools, these technologies can redefine efficiency and effectiveness.
4. Companies Owning First-Party Data: Data is the new oil. Acquiring companies that control valuable datasets can create insurmountable competitive advantages.
5. Content Creation Platforms: Platforms that democratize content creation or offer scalable production capabilities.
6. AI Implementation Companies: Firms that specialize in deploying AI solutions, helping agencies operationalize cutting-edge technologies.
7. Companies Like Red Ventures: Media companies that own content-rich properties and leverage performance marketing to monetize them.
The Future of Mergers: Omnicom and IPG’s Missed Opportunity
No discussion of mergers is complete without addressing the potential Omnicom and IPG merger. While such a move might create short-term synergies, it’s unlikely to generate a lasting multiplier for shareholders. The old model of large teams delivering services and media buying efficiencies is becoming obsolete. Instead, these networks should focus on acquiring AI services firms, strategic consulting companies, or AI platform businesses.
In fact, the advertising industry’s future might lie outside traditional players. Imagine Accenture acquiring WPP or a data powerhouse like Palantir entering the space. With their AI and data capabilities, such companies could dominate the $800 billion global advertising market, leaving traditional networks scrambling to catch up.
Conclusion
The dynamics of advertising acquisitions are changing. Networks that cling to the old model of acquiring headcount and billings will be left behind. The future belongs to those who prioritize strategic resources: technology, data, and talent. To remain relevant, advertising groups must rethink their acquisition strategies and embrace a vision that goes beyond short-term financial metrics.
As someone who has been deeply entrenched in this industry, I believe the next decade will determine which networks thrive and which fade into irrelevance. The stakes are high, but so are the opportunities for those willing to adapt. Let’s hope the industry is ready to rise to the challenge.