Do advertisers want consolidation?

As WPP announces that Maxus and MEC are to merge, the7stars’ Jenny Biggam asks if this is really in the interests of clients

The news of the merger between MEC and Maxus sent shockwaves through the industry last week. While Maxus may be MEC’s smaller sister on the global stage, in the UK Maxus has certainly never been small in terms of its ambition to attract and retain some of the country’s biggest advertisers.

The agency has always been very well respected and many in the industry will feel saddened by the demise of another media agency, not least the talented team there.

It’s only a few months since M2M was closed by parent company Omnicom and although the circumstances were different, it seems that both holding companies are focused on consolidation. Most of the big groups, WPP in particular, are very skilled at managing client conflict – and so they seem to have little need for multiple media agency brands.

The challenge for advertisers is to find any client benefit in agency cost-cutting and consolidation. In my experience, as media has increased in complexity, the traditional agency management metrics such as billings per head have become irrelevant.

If the objective of the MEC/Maxus merger is to save headcount then it will be difficult to achieve without compromising campaign effectiveness. Delivering great campaigns today requires more people and a more diverse skill set than ever before.

So, is bigger always better? Not if you believe the theory of “Dunbar’s number,” which is based on research by anthropologist Robin Dunbar who claims that the optimal size of all communities, including business organisations, is 150 members. Any more, and relationships among group members tend to break down.

Bigger agencies have to work much harder at integration, to get teams to work together effectively. Specialisms can quickly become silos and advertisers can start to get frustrated with the lack of speed and agility.

Perhaps that is why the independent media agencies are enjoying so much success in the face of increased consolidation at the big groups. Independent agencies (including ourselves, MNC, Goodstuff and many others) have grown by 30% during 2017. Collectively we have billed more than the IPG and Havas media agencies combined.

Many smaller agencies are also better places to work. They are able to create more entrepreneurial environments where individuals’ ideas are listened to and where their talent is more easily recognised and rewarded. Ironically, Maxus out-performed its bigger sister agencies (and competitors) in this year’s Sunday Times Best Companies to Work For league table. And the7stars has been in the top twenty for the last five years.

I have no doubt that a newly merged MEC/Maxus will be a quality operation and will deliver better returns to WPP’s shareholders. But I think it’s equally important that the media industry has such a vibrant independent agency sector – providing advertisers with an alternative to the commodity players, and providing talented people with flourishing careers.

Jenny Biggam is CEO and co-founder of the7stars