An end to a tumultuous year for advertising agencies. What’s next ahead?

As 2025 draws to a close, advertising finds itself caught between consolidation and reinvention—forced to get bigger even as its traditional role grows smaller. Under ordinary circumstances, a multi-billion dollar merger may be considered a sign of a rapidly progressing industry. But the $13.5 billion deal between Interpublic Group and Omnicom in November this year is more a sombre end to an exceptionally rough year for the Big Six (now five) advertising agency networks.

The post-merger Omnicom is now the world’s largest advertising network with $25 billion in revenues, but the network and its peers WPP, Publicis, Havas and Dentsu are contending with their increasing irrelevance. Big Tech firms increasingly eat into the business of advertising and a flood of artificial intelligence (AI) applications are quickly automating all parts of advertising – from creating them, to buying media, to managing campaigns across an endless choice of platforms and content.

These long-term changes are already causing damage to the industry in India. Layoffs are likely to start soon among agencies owned by IPG and Omnicom, especially as the two companies discarded many legendary agencies, including FCB and DDB. We wrote about this in Mint earlier this month; the merger has only made a prevailing anxiety worse.

Per global marketing research firm COMvergence, billings for most of the world's top agency networks have been barely growing or declining. For instance, in 2024, Dentsu's global billings fell to $26.7 billion, from over $29 billion in the previous year. Similarly, WPP Media (earlier known as GroupM) reported billings worth $62.4 billion in 2024, down marginally from the previous year.

Global numbers show a bleak picture. Sales of WPP, the largest advertising network in India (and second largest globally) shrank nearly 6% in the third quarter of this year, per its latest available quarterly filing. However, WPP India grew nearly 7% while nearly all of its territories contracted, thanks to “strong new business momentum” in WPP Media (formerly, GroupM). Dentsu’s net revenue grew 1.4% in the quarter ended September, but its Asia-Pacific business contracted 12.5% during the period; the legacy network is looking to sell all of its international business (outside of Japan), the Financial Times had reported in August this year. This was partly because Dentsu's business in Australia and New Zealand have been struggling after a painful restructuring.

Only the French seem to be holding on. Havas reported a 3.8% growth in sales in the third quarter of the year, led by more than 8% growth in revenue in Asia-Pacific and Africa combined. Meanwhile, Publicis Groupe reported a 5.7% growth in revenue, led by 6.5% jump in Asia Pacific and €12 billion in technology, especially AI, in the last 10 years, the company said in its investor presentation. This is more in line with Accenture Song, the creative services arm of the IT services firm Accenture, whose revenues also grew 8% to $20 billion in the 12-month period ended August 2025.

So, why couldn’t all the Big Five networks invest in technology and survive? Some say, they cannot.

Big Tech boogeyman

“My personal view on why networks are really struggling? Globally, everyone has gotten focused on the coming quarter and the company bottomline,” a senior advertising executive close to the Omnicom-IPG merger in India, told Mint. “That stifles innovation. But, a lot of future-focused initiatives and investments will not give Ebitda returns in the long run.”

In fact, the executive said, these huge network agencies may not be in a position to nurture any innovation at all.

“These legacy networks don’t let new things easily simmer or grow within the system,” the executive said. “So, I think it is less technology and more a culture and control environment, and not a very innovation-focused environment.”

It’s not for lack of trying. For instance, this April, WPP Media bought Infosum, a data clean room startup. In 2023, Omnicom bought an e-commerce and retail media agency Flywheel. But they aren’t even leading M&A activity in advertising any longer; data from research firm COMvergence shows that only 19% of all agency acquisitions were done by the ‘Big Six’ in 2024; in 2016, these networks had accounted for 88% of all acquisitions. Instead, management consultancies and other companies are getting into this business worldwide, and in India.

But, acquiring smaller companies–and now each other–may only serve to inflate the size of these agency networks. It may not necessarily make them more likely to adapt to an advertising industry led increasingly by technology.

“In 2024, digital advertising surpassed television and that is probably what accelerated the demise of the ‘TVC-first’ agency,” Mairu Gupta, founder and chief executive officer of Antkind Collective told Mint. His agency specializes in marketing brands dealing in climate change and deep tech. “These agencies don’t understand digital media in depth because media is getting increasingly fragmented. That is where specialised, niche-focused agencies can play a bigger role.”

Legacy agencies aren’t just acquiring technology firms. Some, such as WPP, are also trying their hand at building in-house tools to be used across segments of the advertising business. In June this year, WPP Media launched Open, an AI tool that feeds on consumer data to help the group to build predictive models for their clients and target their campaigns more accurately. Their rivals among legacy agency networks and consulting firms are also investing in similar AI tools.

Global, local, others

The way ads are made are shifting too.

“The thing that has not gotten picked up is that the clients are expanding their in-house creative setups,” Naresh Gupta, co-founder of independent ad agency Bang In The Middle, told Mint in an interview earlier this month. “Clients are increasingly working on basic, everyday creative work. Most tech startups are now doing their own creative work. In fact, most tech startups are not really startups, they are ad agencies. Look at Zomato!”

For context, Zomato was among the first 'new age' Indian firms to build an in-house creative team when its quirky visuals and food-related humour on social media became a benchmark for online brands in the late 2010s. Others such as Swiggy and Dunzo later followed suit.

Larger conglomerates have followed suit. Take Godrej Consumer Products, which set up Lighthouse Creative Lab two years ago. As a result, legendary creative services agencies that the big networks are known for may be fast losing value, at least for India’s best known brands.

Besides, senior ad executives say, the global agency network structure may not work anymore altogether.

“Around 30-40 years back, it was all about localized marketing for localized markets,” said the senior executive quoted above. “Then, it moved to global marketing mandates and now again it is all about nuanced marketing within India for India. Holdcos [holding companies] are good for a globalized market but not so much for such a localized environment.”

Regulatory overhang

Finally, agency networks are entering 2026 with two big regulatory challenges.

First, all major networks are under investigation by the Competition Commission of India for allegedly colluding to fix prices when buying media for their clients. In March, the CCI raided the head offices of these agencies, confiscated documents, and questioned top executives. In fact, Madison Communications, founded by Sam Balsara and headed by CEO Ajit Varghese, has filed two petitions in the Delhi High Court challenging the manner of CCI’s investigation and asking for protection from the CCI’s ‘unconstitutional’ methods.

Second, now that India has formally notified rules for the Digital Personal Data Protection Act, advertising agencies may have to restructure their processes across many fronts. They may have to change the way they manage personal data for their clients, and everyone in the business may struggle to use personal data to accurately target their intended audience, forcing agencies and their clients to invest more in first party data. As agencies deal with more and more data, they may need to conduct more audits and data reviews, which could make compliance more costly. For now, everyone in the country has until early-mid 2027 to comply with these rules.

However, Navin Khemka, president - client solutions for WPP Media South Asia, says there is little reason to write off the agency business in India.

“In adex [advertising expenditure]-to-GDP ratio, we are nowhere near the global average,” he told Mint in an interview.

“I think there is headroom for adex to double in the next five years. So many new brands and startups are being launched, and they will need a lot of help in terms of go-to-market strategy," Khemka said. "New brands hit a ceiling after initial growth and they don’t know what the next step is. This is where the agency will play a very vital role. There is enough and more for all of us to grow.”