Six ad holding companies — WPP, Omnicom, Publicis, IPG, Dentsu, and Havas — have long dominated ad spending but now face challenges from all sides.
Chris Sahota, CEO of M&A advisory firm Ciesco and former IPG exec, said holding companies had an advantage with big advertisers because they had the scale to produce and buy ads at large volume. But the rise of Google, Facebook, and Amazon let agencies run campaigns with lean operations, diluting the holding companies’ power.
The pandemic accelerated this trend as advertisers cut spending.
New ad agencies and networks have emerged in recent years to take on the big names.
They vary by size, structure, and funding sources. Some are backed by private equity firms. Most are private, giving them operating flexibility. Many are led by former holding company execs who want to focus on growth areas like ad tech and digital media rather than buy up agencies that can end up competing with each other.
Holding companies still control big brand budgets, but the newcomers are competing with them and winning business, Sahota said. “On paper, they look very appealing and relevant.”
Their true test will be whether they have the capabilities and infrastructure to oversee huge accounts, Sahota said.
Insider identified 12 companies, listed in alphabetical order, based on their recent financial performance, M&A activity, and conversations with industry experts.
Acceleration Community of Companies
Acquisitions: MKG, Pink Sparrow, Stripe Theory
Michael Nyman started Acceleration in 2018 because he saw traditional ad holding companies were struggling due to internal agency infighting.
Acceleration invests in or works with specialist companies to avoid this kind of rivalry, the former CEO of IPG-owned PR firm Rogers & Cowan PMK said. Its first acquisitions in 2019 were event marketing agencies MKG and Pink Sparrow; it later bought reputation monitoring firm Stripe Theory and formed partnerships with cannabis PR agency Trailblaze and Broken Road, the production studio behind “Mortal Kombat.”
Nyman called Acceleration “the alternative to the alternative” and said it isn’t looking to unseat companies like IPG, though it has come up against far larger networks in pitches.
While the company maintains a low profile, its principals’ entertainment expertise has led to projects like The Weeknd’s Super Bowl LV halftime show, big game ads for T-Mobile, and the launch of Martha Stewart’s line of CBD products for pets.
Acceleration wants to develop its PR, ad-buying, and creative services and plans to invest in up to 15 companies in the $10 million to $50 million revenue range during its first five years.
Boulder Heavy Industries
Investments: Brandzooka, Fact & Fiction, Respondology
Colorado’s Boulder Heavy Industries is a marketing services network that doubles as a venture fund. BHI invests in startups that aren’t yet profitable and incubates companies that can become standalone businesses or fold into its other properties, founder and chairman Adam Edelman said.
For example, the network recently went in on a Mark IV Capital-led $5.6 million Series A round for programmatic ad-buying platform Brandzooka, co-founded by famed ad exec Alex Bogusky.
BHI pitches itself to advertisers as a company that lets CMOs interact directly with founders instead of mid-level account executives.
The network, which spun off from digital advertising and e-commerce agency IMM in 2016, includes companies like social media agency Fact & Fiction, data firm Principia, and tech platform Respondology, which helps brands and influencers moderate comments.
BHI works with brands including NASCAR, Five Guys, Allstate, and Williams-Sonoma, and is on track to do $50 million in gross revenue this year, Edelman said.
Longtime ad execs Dan Khabie and Kenny Tomlin launched CourtAvenue in 2020.
The company calls itself an operating network that offers design, marketing and consulting services to businesses that want to become more digital, Tomlin said.
CourtAvenue completed its first acquisition in December 2020, buying 75% of e-commerce agency Modifly. Tomlin said its next investments will be in artificial intelligence software to help clients manage their own data.
Beyond M&A, CourtAvenue plans to launch businesses like a document-sharing software startup and an agency to help clients advertise with retailers like Amazon, Target, and Kroger. CourtAvenue will have majority ownership of all properties, said Tomlin, who formerly ran WPP’s venture capital division.
In recent months, CourtAvenue hired former WPP exec Michael Stich as CEO and got its first big new business win when it became Kia North America’s lead digital agency in late 2020.
Tomlin said CourtAvenue sees consulting firms like Accenture and digital marketing agencies such as AKQA and R/GA as its chief competitors. The company is on track to reach $10 million in revenue and double its headcount by the end of 2021, he said.
Properties: Crossmedia, Barkley, Co:Collective
Ad-buying firm Crossmedia launched Dawn Marketing in 2019 to create a network of independent agencies, and says over 60% of its business comes from brands that are former holding company clients.
CEO Bob Kantor, former MDC Partners CMO, said Dawn offers CMOs access to a network of more than 10 specialist agencies that include Barkley and Pereira & O’Dell, micro-influencer firm Main Street One, and Bleacher Report’s internal marketing division Playmaker. The network also has shared resources like Crossmedia’s data analytics division Red Box.
Dawn agencies want to both collaborate on big-budget pitches and win new business by offering different services to existing clients, Kantor said.
Agencies in the network pay membership fees and a percentage of new business revenue. Arrangements vary for each member agency, and Dawn also has equity agreements in case they get acquired, said Crossmedia CEO Kamran Asghar.
“There’s no explicit financial goal for Dawn. We have no earnout requirements, and we can’t fire anybody,” Asghar said.
Acquisitions: Byte, Basic, Devetry
Dept is a digital agency that helps clients like Adidas, Sony Playstation and smaller startups with services including marketing campaigns and customer experience design, said CEO Dimi Albers.
Dept made 20 acquisitions under private-equity firm Waterland before being bought by Carlyle Group and snapping up small and mid-size properties like marketing tech agency Byte, software consultancy Devetry, and app-building firm Rocket Insights.
Albers said Dept sets itself apart with a combination of data, technology, and creative services. It also had private-equity backing before PE firms began investing heavily in the industry three or four years ago.
Unlike holding companies, all Dept’s properties have a single profit and loss statement. Dept also gives principals shares in the company rather than stock options or traditional three-to-five-year earnout plans.
This structure helps retain employees because everyone has to invest their own money, Albers said.
Albers said he views traditional agencies, consulting firms, and groups like S4 Capital as competitors. He plans to reach 5,000 employees by 2025 by acquiring more digital marketing and tech businesses in the US and Europe and expanding to Asia-Pacific.
Dept says it brought in $230 million in revenue last year.
Acquisitions: Social Life, Reamp, Webedia Brand Services
London-based agency Jellyfish offers digital services like data analytics, SEO, and development of in-house programmatic ad buying teams. It’s been on an M&A spree since French investment giant Fimalac acquired 50% of the company for just over $700 million in late 2019.
Before the deal, Jellyfish was a rare independently owned digital marketing agency with an international presence. But growth had been a challenge due to a lack of capital, said CEO Rob Pierre.
Now, Jellyfish bids against the biggest names as well as newcomers like Dept and You & Mr. Jones for M&A, the CEO said.
“We’re not quite at an S4 rate of M&A, but we’re in the position to do so if we wanted to,” Pierre told Insider.
Pierre said Jellyfish oversees around $1 billion in annual digital ad-buying, or the equivalent of a single big agency client like Facebook. But it has worked with Disney, Slack, and Spotify, and eventually wants to handle all digital marketing for top brands.
Pierre said Jellyfish doubled its headcount and revenue over the past year-plus and brought in around $280 million in 2020.
Acquisitions: Stun Creative, Blackbird
Former Viacom execs Kern Schireson and Ross Martin launched Known in 2020 with private equity from Intermediate Capital Group. It acquired Martin’s design agency Blackbird and production company Stun Creative and merged them with Schireson’s eponymous data firm, whose clients include Google, Microsoft, and Amazon.
Schireson describes Known as a platform offering market research, data science, and content production. While Known has outside backing, employees still own a majority of the company, he said.
Known often pitches against holding company agencies for new business but isn’t yet large enough to compete with them on M&A, Schireson said.
Beyond its digital work, the firm created two Super Bowl LV ads for the NFL and St. Jude Children’s Hospital, and in late 2020, it turned Nathan Apodaca’s viral Ocean Spray TikTok post into a traditional TV ad campaign promoting the platform.
Schireson said Known has doubled headcount and earnings since 2020, when annual revenue was about $100 million.
Properties: Untitled Worldwide, Chapter, Van’s General Store
Former journalist and Droga5 CEO Andrew Essex and ex-Disney exec MT Carney launched Plan A in 2018 as a network of new, independent specialist agencies.
Essex said marketers favor agencies that focus on specific services over those that compete on scale. Additions to the Plan A network, like fashion-focused Twin Studio and gaming agency Twofivesix, reflect this strategy.
Essex did not share Plan A’s finances or structure but compared it to a talent agency that represents its member properties.
Essex said he plans to avoid investing in standard services like programmatic ad-buying but expressed interest in emerging specialties, specifically audio marketing.
Plan A’s most recent move came in January 2020, when it added four new agencies, including PR firm The New New Thing and design agency Chapter.
Acquisitions: OS Studios, Praytell, Partners & Napier
Robert G. Valley, Jr. founded Project Worldwide in 2010 when he was CEO of event marketing agency George P. Johnson, the largest of its 13 properties.
Like a traditional holding company, Project acquires controlling stakes in companies. It seeks specialized agencies like entertainment-focused G7, retail firm Shoptology, and esports company OS Studios.
Project is an ESOP business, with 10% of employees’ earnings coming in the form of stock awards. Valley Jr. said this structure encourages retention and collaboration among agencies that offer different services to shared clients like PepsiCo.
The company often goes up against names like Droga5, VaynerMedia, and Edelman in new business pitches but doesn’t participate in global, multi-agency reviews, said Valley Jr.
Project doesn’t share earnings, but Valley Jr. said it brought in $500 million in net revenue in its strongest year, and that all Project agencies remained profitable in the pandemic.
OS was its first acquisition since 2018, and it plans to expand its esports practice by acquiring one or more firms in the Asia-Pacific region and merging them with OS.
Acquisitions: Media Monks, MightyHive, Jam3
Sir Martin Sorrell launched S4 Capital in 2018 only months after resigning as the CEO of WPP. Since then, he has acquired other digital marketing businesses at a rapid clip while winning business from Facebook, Google, BMW, and Mondēlez.
S4 is the only publicly traded business on this list, and it has grown consistently, reporting a 33% profit increase in the first quarter.
Sorrell calls S4 a “unitary structure” centered on production company Media Monks and MightyHive, which helps brands take their programmatic ad-buying work in-house.
Sorrell has named traditional ad agencies Deutsch and M&C Saatchi as potential targets, but most of his acquisitions have been digital properties like Decoded Advertising and production company Jam3.
Sorrell told Insider he most often bids against private-equity firms for acquisitions and sees Accenture as his biggest competitor.
In recent months, he’s expanded the company’s services and global footprint. S4 entered the public-relations field by acquiring Low Earth Orbit, bought Chinese agency Tomorrow, and merged Brazilian performance marketing firm Raccoon with MightyHive.
York Creative Collective
Properties: GYK Antler, Big Brick Productions, Iron & Air Media
Former Havas executive Travis York founded York Creative Collective in 2019 as a network centered on ad agency GYK Antler, where he was president and CEO.
York said the New Hampshire company wants to attract clients and employees that want to work with a smaller, more intimate network. He said GYK has been invited by search consultants to compete for new business with holding companies and large indie agencies in recent months.
GYK creates big campaigns for brands like Hasbro and Ocean Spray, while Big Brick, a commercial production company, produces video content for publishers including ESPN, Fox, and Barstool Sports.
York owns or invests in several other properties such as Iron & Air Media, a platform for motorcycle enthusiasts; TorchPro, which helps pro athletes promote themselves online; and drum maker Noble & Cooley.
It’s also a family affair. Tech investment firm York IE, founded by Travis’s brother Kyle, has invested in the company, and its properties include family-owned DTC footwear company York Athletics Mfg.
York said the business grew about 20% in 2020 and brought in around $35 million in revenue.
You & Mr. Jones
Properties: Oliver, Mofilm, Vidmob
Former Havas CEO David Jones launched You & Mr. Jones in 2015 because he believed the holding companies would gradually lose business to digital platforms and in-housing.
“We think all our clients still need an ad agency and media agency, but we’re not looking to do that because it’s no longer a consistently growing industry,” Jones said.
Two of its properties, Oliver and a new ad-buying division, help clients like Unilever and Adidas create internal marketing teams and hire new talent. Jones also invests in digital companies like Pinterest, video editing platform Vidmob, and gaming company Niantic.
You & Mr. Jones was valued at $1.36 billion after its last fundraising round. The privately-funded company does not share revenue, but Jones said it had 34% organic growth in the first quarter.
You & Mr. Jones has been busy on the M&A front, often bidding against private-equity firms as well as Accenture, Deloitte, and S4 Capital.
It plans to raise more capital, build its ad-buying practice, and expand its presence in Latin America and the Asia-Pacific region, Jones said.