The Leadership Succession At WPP & Publicis Will Have A Big Impact On the Future Of Native Advertising

For the past thirty years, the advertising industry has been monopolized by conglomerates.

Companies such as WPP, Omnicom, Publicis, MCN and Havas, amongst others, have dictated how the industry is run. Reputable independent agencies have been swallowed up and M&A has seemingly become the core growth model.

These groups are the bastions that stay firm. This week, they are calling for third parties to measure Facebook more closely, and already control most of the $600 million global advertising industry (which I personally think will rise to $1 billion over the next twenty years or so, but that’s for another day). These organizations are therefore, fundamental to how the media and commerce are currently structured and how they work.

They have also remained steadfast in being pure play marketing services. This essentially means that any agencies who offer services — whether creative, media planning & buying, PR, digital design & development, social media or market research — are all fair game to be acquired.

They haven’t crossed this line for the most part. Some would argue that WPP own media and tech through their programmatic arm Xaxis, or native advertising platforms like Plista. This is a sign of what is to come.

Despite this, they haven’t bought TV stations or any media publishing. They haven’t bought technologies or social media networks, and they won’t. For now.

Overall, these large companies have served the industry well. Remaining or at least appearing neutral, is one of the reasons (if not, the only one) why agencies have held their ground while Facebook and Google swallow up all the adland around them.

The succession of Sorrell and Levy at the top of WPP and Publicis respectively, and of John Wren at Omnicom will have a massive impact on the future of the industry.

Times are changing.

People are now breaking the rules. The media which was fragmented in terms of consumer consumption for the past three decades, was why agencies grew in importance — they had to target people across multiple mediums.

Now, however, it’s the business side of things that is becoming fragmented.

I recall Sir Martin Sorrell speaking last year in front of around 100 Mindshare employees in the London office. This was on the same day that Verizon bought AOL. One year later Verizon also bought Yahoo. Sorrell was flabbergasted because that sort of M&A just wasn’t part of his DNA. He was one to strictly follow marketing services and to be fair, it has served him well.

Despite the M&A movement shocking the more traditional industry leaders, this year, acquisitions from one industry to another have continued. Microsoft bought LInkedIn; Newscorp bought Unruly and now, Salesforce (or insert one of 10 rumored suiters) are expected to buy Twitter.

There are lots of reasons for this new trend.

The main one is that advertising has become native. This is true regardless of how you view the industry. Native is now one with content and data, and publishing plays a pivotal role. This explains why media groups are pioneering the M&A scene.

So…

The next leaders of big ad groups will face a choice, one that that rings true for all successors, whether family businesses or football clubs — “Do I do the same things or create my own playbook?”

The answer is that the best thing to do is what works in the current environment. However, at present in the world we live in, ad groups are no longer fit for purpose.

Media and tech companies are stealing a M&A march on them. When these new leaders take over, many of the best deals will already have been made. (Twitter is a bargain at $16 billion, and I bet a younger, fresher leader of WPP or Publicis would enter the bidding ring for it).

Of course, a new approach has its own ramifications, but the simple truth is: agencies built on people and culture, are no longer enough to meet the needs of brands these days. They also can’t reach consumers who live an ‘always on’ lifestyle.

Taking all this into account, our media publishing (Augustus Media), data tech partners (Augustus Data) and agencies services (Augustus Content), are positioned to weather the storm that is coming, by facing the same tide as Facebook and Google super yachts, and while navigating the changing industry when the big ad group ships sink.

The likes of Verizon are making an early play on the future of media. The big ad groups need to follow fast. Just look at Disney trying out with their multi-channel network Maker Studios, and now talk of their own ESPN acquiring Twitter. Native advertising is the future, no matter how it is bought. And companies need to be structured accordingly, that includes M&A strategies.

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