Advertising companies struggle to adapt to a new world

It has been a miserable year for the holding companies that own the world’s largest advertising groups, with shares in WPP, Publicis, Omnicom and Interpublic Group all down sharply over the past 12 months. Consumer groups are rethinking their marketing spending while unease about the effectiveness of digital advertising has damped investor spirits. With advertising’s Mad Men in danger of becoming sad men, what future is there for the holding companies? Their business model, which has traditionally brought together creative agencies, media buying and planning groups, is under attack on multiple fronts.

Activist investors are putting pressure on the biggest advertisers to cut spending while professional services firms such as Accenture have emerged as able competitors to the big agencies. Meanwhile, Facebook and Google have effectively become a “digital duopoly” to the extent that they represent about 60 per cent of the global digital ad market, according to eMarketer, the research group.

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