Agencies Merging in the Face of GDPR

One of the ways agencies grow is by buying smaller agencies. In theory, that gives them access to more clients, a fresh creative staff, and a way to create scale to ward off competitors. However, mergers and acquisitions are only as good as their integrations into the mother ship.  According to an article in AdExchanger,

There were 398 acquisitions in 2016 with a total investment of $14 billion.  The Big Six – WPP, Dentsu, Havas, Publicis, IPG and Omnicom – were responsible for 89 acquisitions, at a value of more than $3.3 billion.

Figures through September showed 291 acquisitions this year. And in this game of agency supermarket sweep, many of the targets come from the data, digital and programmatic aisle.

This could prove tragic in the long run. The good news is that at long last agencies seem to understand that digital, data and programmatic are capabilities they need to have. But they are one step behind in the race to the future. As a result of coming new data privacy regulations, such as the European GDPR (Global Data Privacy Regulations), many marketers have data at the forefront of their minds, but for the wrong reasons. They know they are going have difficulty using it the way they did in the past, because now the consumer will be in control of her data.

What the big agencies really should be doing is studying up on those regulations and coming to grips with the limits that will be placed on the use of data in the future. Agencies are usually headed by people who may know the creative side of the house but don’t keep very good tabs on data. There will be an amazing culture clash when the data-driven geeks arrive in the house. There will be equally big problems because programmatic itself is coming under scrutiny for brand safety issues and ad fraud. So far, the geeks and the creatives have been kept separate, in separate companies. If they come together under one roof, that holding company will have to tighten its controls to make sure that the data flowing through its acquisitions is in compliance with the new regulations, or the fines will be significant.

So what the agencies will need now is a new cadre of management familiar with aspects of the business that have been lumped into a separate bucket called “martech.” And they will probably have to beef up their compliance departments as well.

In the rush to integrate acquisitions and learn more about how to manage data, guess what will get short shrift again? True creative, the kind that makes advertising users want to see.