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The world of marketing is dominated by five massive and well-established companies.
Anyone who has worked in the industry for any length of time will no doubt know them offhand – but how did these firms come to be so big, what similarities do they share, and how could this affect you as an agency owner? Let’s take a look at what the top five biggest agencies in the world look like.
When the question ‘who are the biggest agencies in the world?’ comes up, the answer often starts with the British-based WPP plc. – the biggest of the bunch since 2008. It is an umbrella firm that includes some of the most well-known agencies in the world, such as Grey, JWT, Ogilvy & Mather, and Young & Rubicam.
This behemoth has its roots in a slightly odd area: shopping baskets. WPP once stood for Wire and Plastic Products plc, a company founded in 1971 to produce… well, wire and plastic products. In 1985, Martin Sorrell, looking to launch a global marketing company, used the listed manufacturer to start what is now the world’s leading ad agency.
Previously, Sorrell had managed acquisitions and takeovers for Saatchi & Saatchi, a talent that he used to great effect in his new firm, which acquired a series of agencies in the ’80s and ’90s. This included the 2000 acquisition of Young & Rubicam for $5.7 billion – the largest takeover in the ad sector up to that point. Last year, Sorrell retired from the company, but WPP continues at the forefront of the industry with more than 130,000 employees around the world and annual revenues of almost $19 billion. WPP also made teapots for quite some time – diversifying, it seems!
The next of the big five is a New York-based agency that started life in 1986 with the merger between BBDO Worldwide, Doyle Dane Bernbach, and Needham Harper Worldwide. The firm’s history (at least in part) actually stretches all the way back to the 19th century, when in 1891 George Batten opened a one-room ad agency in NYC, the beginnings of BBDO, which is now considered one of the most creative agencies in the world.
As of this year, Omnicom has over 70,000 employees and revenue of more than $15 billion a year. Omnicom acts as a parent company of parent companies, who in turn oversee more than 1,500 smaller agencies. However, one merger that wasn’t to be was with another of our big five (and next on our list) Publicis, whose deal fell through in 2014.
The oldest on our list so far, Publicis Groupe S.A is a French group that was originally founded in 1926. It wasn’t until some years later, however, that the company really took off, with major growth during the French post-war economic revival.
Publicis is headquartered in Paris and as of 2015 is divided into several distinct sections. First, Publicis Communications, which oversees the creative networks. Second, Publicis Media, which controls media planning and buying capabilities. And finally, Publicis.Sapient, which focuses on digital agencies, and Publicis Healthcare, which is self-explanatory. The group now has around 75,000 employees in their vast network of agencies as well as strategic partnerships with other major ad groups and annual revenue of more than $9 billion.
Another New York firm, Interpublic is formed of five core networks: FCB, IPG Mediabrands, McCann Worldgroup, MullenLowe Group, and Marketing Specialists. It also has many other smaller agencies around the world who specialize in a variety of fields.
The group was founded as McCann-Erickson in 1930 with a merger between H.K. McCann Co. and Erickson Co., creating the largest agency of its kind at the time. In the 1960s, the company underwent serious structural changes, becoming the first marketing services management holding company under the name Interpublic Group.
The early 2000s saw IPG make a series of large-scale international acquisitions, but following financial trouble, these takeovers slowed, and the group exited 51 companies between 2005 and 2006. However, their recent acquisition of Acxiom’s Marketing Solutions could show a return, and while they’re no longer the largest in the world, Interpublic Group still has around 55,000 employees and revenue of around $7.5 billion.
Arguably the oldest of the big five, Dentsu was founded in Japan back in 1901. It was originally made up of Japan Advertising Ltd and Telegraphic Service Co. and secured its place in Japan’s marketing history by leading the way in newspaper and television advertisements throughout the 20th century.
Outside of Japan, Dentsu operations are overseen by the Dentsu Aegis Network, which formed in 2013 from the acquisition of the British-based Aegis Group plc. Now, Dentsu has dozens of companies both in and outside of Japan with more than 62,000 employees and revenue of over $6 billion.
The Struggles and Successes that the Big Five Share
So how do big agencies run? And why are some agencies successful to the point of multi-billion-dollar profits, like the ones we’ve talked about above? Well, the answer is quite simple: merge, acquire, merge, acquire. None of the biggest agencies are really agencies at all, but networks that control many smaller niche companies that can deliver specific work to clients. They have grown to their monolithic size not through specific campaigns, but by smart maneuvering throughout their long histories.
However, they seem to be losing some of the power they once held. While they still account for about 50% of marketing spending globally, the other 50% is going to smaller firms and in-house teams. Why? Technology has played a major role in shifting some of the power, with small, independent firms now better able to compete and adapt quickly to shifting digital markets.
The question you really want to ask is how the big five affect you. And, for the most part that depends on whether you’re wondering, ‘Should I sell my agency?’. They have been successful through acquisitions, and will no doubt continue to push various takeovers. If you’re looking to exit, perhaps do a little more digging into WPP or one of our other top five. But with shifts brought on by new digital tools, it might well be the era of the little-guy ad agency.