Over the past week, speculation has been rife about the fate of Omnicom’s 76-year-old advertising and communications network, DDB. As the Omnicom Group and Interpublic Group prepare to merge by the end of this year, industry rumours suggest that the former may phase out the legacy DDB agency, at least in some countries.
Naturally, the news has sent shockwaves across the industry. After all, this is an agency that redefined advertising in the latter part of the 20th century with memorable work on brands like Volkswagen, McDonald’s and Johnson & Johnson. Omnicom soon after shared a statement saying that it is “undertaking a rigorous and considered process to ensure we have the very best solutions for the future for us and for our clients.”
But the uncertainty hanging over the future of DDB raises more important questions for the advertising industry at large. Are global legacy agencies dying a slow death? It was just two years ago that WPP terminated its legendary Wunderman Thompson brand. Other major networks such as Publicis Groupe also announced the merging of Publicis Worldwide and Leo Burnett into the newly formed Leo entity.
Legacy agencies were built for an era when creativity was the only differentiator and there were far fewer competing agencies, says Karthik Srinivasan, brand strategy consultant. “Now, there are a lot more creative agencies and most of them focus on creativity plus speed, data fluency, and measurable business outcomes, unlike legacy agencies that want a foot in the door because of their heritage alone,” he explains.
Large networks often also struggle with complexity, with too many overlapping brands, processes, and P&L silos, all of which slow them down. “Mergers or retirements are an attempt to simplify the structure. Networks may be trying to evolve from house-of-brands structures to branded houses that reflect a single, powerful value proposition,” he adds.
This transformation from a creative agency into a network with multiple offerings has also created an identity crisis of sorts for these ad firms. According to Nisha Sampath, managing partner at Bright Angles Consulting, the dilution of their core identity to offer a ‘service bouquet’ has stripped them of the creative personalities that made them distinct and memorable in the first place. “Global leaders are too often from financial backgrounds and treat creativity like any business. For them, mergers and acquisitions make economic sense as a way to consolidate and improve profitability. But in the process, creative cultures that are valued are often getting wiped out,” she remarks.
Ergo, marketers need to choose their agency partners more carefully than ever.
Changing client priorities
What is also adding to the woes of creative agencies is the evolving demands from clients, who expect bigger results but with lesser budgets. Since clients now expect more from every project, they offer some key projects to independent agencies while continuing routine work with retainer agencies, points out Aalap Desai, co-founder and CCO of independent agency, tgthr. “This arrangement is tough on both kinds of agencies, because the challenges are stacked high for the independents, and the networks are losing good project opportunities,” he remarks.
“The biggest strength a network agency has is delivery at scale. Unfortunately, the current market conditions have turned this into their biggest weakness,” opines Desai, noting that shrinking revenues are another reason that network agencies are being compelled to scale down and retire prominent brands.
The other major shift that advertisers are making is towards performance marketing. Most creative agencies over the years have gained prominence for their brand building achievements. Today, however, new-age advertisers are prioritising performance marketing while brand building has taken a backseat.
“Creativity is no longer about winning hearts alone; it must win wallets,” states Rohit Ohri, founder of Ohriginal. “The world has become brutally short-term. What clients really want now is creative thinking that doesn’t just look good on a reel, but needs to move business metrics. It’s a new kind of accountability.”
Given that, Ohri emphasises that the advertising business is currently in the midst of its biggest reinvention in decades. “AI has already taken over the grunt work. Consultancies have muscled into the room with business credibility. And in-house teams are producing everyday creative work at speed. If agencies don’t evolve, they will be reduced to production shops or museums.”
The way forward is for agencies to reinvent themselves from communication makers to business problem-solvers. Creativity has to earn its right to sit in the company boardroom by talking about growth and not just campaigns, Ohri sums up.
