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Agency Consolidation & Investing in Local Media

• Campfire Consulting

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Agency consolidations are transforming the media landscape, presenting both opportunities and challenges for global and regional brands. The discussion explores the balance between technological advancements and the risk of losing local accountability and creativity in an increasingly centralized market. 

• Highlighting growing agency consolidations and expected impacts 
• Exploring opportunities for both global brands and regional challengers 
• Assessing innovation versus assembly line production in large agencies 
• Discussing accountability challenges in relationships with media tech partners 
• Evaluating talent retention amid hybrid work models 
• Analyzing risks of losing local journalism and increasing news deserts 
• Detailing how boutique agencies can maintain unique creative approaches 
• Encouraging a balanced future for media agencies amid a wave of consolidation

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Speaker 1:

Welcome to Fireside, a responsibly different podcast where we spark candid conversations about media investments and the strategies shaping the way we connect.

Speaker 2:

All right, david. Well, we can't be in 2025 without talking about all the agency consolidations that are happening. A lot happened in 2024. There's already a lot in the works for 2025. It's expected to just accelerate and there's a lot of really interesting things to take into account with all of this happening, because as the large holdco's and large agencies go, so goes a lot of the industry. So, yeah, I think we have a lot of different perspectives to share here. I know you have really interesting ones coming from the search consultancy side and then on the agency side for many years now. And let's dive into that. How do we think it's going to be impacting the innovation, ideas, relationships, all the things? Yeah, what are you thinking about?

Speaker 3:

Yeah, I think there's tremendous opportunity on both sides of the marketplace because of all the consolidation that's happening. Right, if I'm a global brand and I'm looking at this I think I'm excited about the economies of scale, the potential for innovation around technology, the global footprint that now a lot of these marketing agencies have and how that maps into the footprint for some of these largest advertisers that are out there globally. And then if I'm a you know a regional brand that's trying to scale or I'm a national challenger brand that's looking to compete in a different and innovative way, there's an opportunity to work with independent boutique agencies that are going to bring different ideas to the table. So I think that this is a great opportunity for both sides of the landscape to really lean in and figure out where their strengths are, and I know that that's something we've been talking a lot about.

Speaker 2:

I mean, I think it's a fun part of the whole industry is thinking about innovation, and that's one thing that I think about with all the consolidation that's happening, and what happens to innovation if, through these consolidations, everything turns more into an assembly line and, to your point, for those regional challenger brands that need a different approach, how the economies of scale are going to work for large whole coat agencies to service, as they're working downstream, more for smaller brands they might not have worked with before. What's the tipping point on the scale where that even makes sense for them, and then what does that do for everyone is a really interesting thing to think about. How do they tailor things when you're at that scale? I don't know.

Speaker 3:

Yeah, I think what we've been seeing, the way that they've reacted to that, is by creating these like almost like boutique agencies within the whole code Right, and we see that agencies do that for like a McDonald's or a Walmart Right, where they have specific kind of boutique offerings. But the reality is, I think if you were to ask them candidly over a beer, you would find that that it still is kind of off that assembly line and it almost has to be at that kind of scale. And I think that's the point here, right, is that we're not knocking what large hold calls are doing, because it's really really important. It pushes the industry forward from a technology standpoint because while, yes, you know, as it, as it moves through the, through the, through the market, it does become a little bit kind of cookie cutter. But to start, usually they're able to collaborate with some of the largest media platforms, largest technology platforms, and push the industry forward.

Speaker 3:

I think that where it's a nice balance is then there's, you know, and again, obviously we're a boutique, independent agency, so we have our perspective here but often, because of the way technology goes right, that technology gets democratized, it gets better, faster, cheaper and more and more the cycle that this goes through and how quickly independent boutique agencies are able to access that same technology in that same sandbox.

Speaker 3:

Agencies are able to access that same technology in that same sandbox but play around in a way that agencies aren't able to do at scale. It's happening faster and that really benefits us. But I think that we also benefit from like to give one example like a collaboration that like a large hold co can have with like a social listening platform like Sprinklr, where they can really really innovate. Sprinklr can test stuff out and then an agency like us is able to then push that even further with a client that wants to think outside of the box and doesn't need to have that kind of scale that maybe a global advertiser does. So I think again lots of news happening right now about the consolidation. From an economic standpoint, like there's some pretty obvious reasons why this is happening. But from a is this good for our industry? I would say I think both sides of the spectrum are going to benefit from this.

Speaker 2:

And that's interesting thing you bring up in regards to how they can push technology forward, because that's one thing that we think a lot about here is around the supply chain in media and as we talk about media, media is technology. But when we think about accountability with consolidation, accountability can get lost in the shuffle, not just with accountability with clients, but accountability with all the media tech partners that we have. It's like who's going to speak up when the Amazons, the metas of the world, are pushing their agendas forward when you become so intertwined as an agency with that technology and are you able to hold those tech partners accountable? I don't think so. I don't believe you can have that same level of accountability if you become so dependent on each other to continue to make your model work.

Speaker 3:

Yeah, no, absolutely.

Speaker 3:

And again, as you mentioned, like, we talk about this a lot, we think about this a lot because, as a values led organization, we work with a lot of clients that are that are values led, and one of the reasons why they hire us is because we're able to bring them kind of agnostic solutions that align with, you know, not only their business KPIs but their kind of organizational values, and that's something that a lot of larger agencies can't do.

Speaker 3:

And, you know, what I think we're seeing is that for the very, very large end of the spectrum, they're essentially becoming technology companies and for a global brand that is looking for that, it makes a ton of sense to you know, to really explore there. But for most of the clients that we're talking to, um, uh, what they want really is a strategic partner that can help them think creatively about how they're trying to grow their business and not specifically trying to sell in a technology solution or or or a specific media solution. And that is where I think boutique independent agencies will continue to shine, not only on the media side but on the work that we produce.

Speaker 2:

One thing that just seeing and hearing about so far is that you're starting to see these heads of a division of these agencies sitting out of a New York or Los Angeles and representing where some of these smaller agencies that they're pulling it into the fold across the country, and they're the ones that are directing the work from their skyscraper or wherever they may be on one of the coasts. And so if you start losing those distinct voices, there is a really great opportunity to not just be investing in technology but be investing into how we look at building those talent bench and rosters of people from not just the major markets but all the places in between that make up, that make up our country, that make up our everything, our democracy, hopefully a strong democracy. So that idea of fewer distinct voices is one that I think is a challenge that can be overcome and hopefully is paid more attention to.

Speaker 3:

Yeah, you touched on a couple of things there that I definitely would love to unpack together.

Speaker 3:

I mean, the first is you talked about talent, right.

Speaker 3:

So it is interesting to see this these consolidations at the high end of the marketplace happening at the same time that we're seeing kind of strong return to office mandates within our industry, and so I know many people have commented that it almost feels like a forced kind of reduction in staff because they know there'll be some pushback here and they also know that many of the larger agencies are benefiting from the economies of scale that technology is providing the work that AI is now doing on behalf of the agency. So they just need less staff, and large advertisers will benefit from that, I would think. But certainly from a talent and bench perspective in our industry, it does open up a lot of questions. As somebody obviously you own and run an agency that operates on a hybrid model, how do you think this will shake out for the industry? Do you think that they're doing it for the benefit of their clients? Do you think they're doing it to force staff reductions? Do you think it's just a reaction to what their clients want? What do you think is going on here?

Speaker 2:

I think, without coming off too in the middle. I think there's both. I think there is a need for in-person consolidation. I think the fully remote model does have its flaws. I think there and that's something that we work on quite a bit at our company we're constantly flying our team up to where we are and we're, you know, we have biannual retreats along with in-person site visits. That we do quite regularly because there is something to getting people together in a room.

Speaker 2:

However, what I do think there is a piece of it to your point where it does seem like margins are getting tighter, and it definitely seems like a reason to put these rigid RTO policies in place just to be able to say, well, if you can't move back to where we are policies in place, just be able to say, well, if you can't move back to where we are. It gives one more reason, one more data point, that they can just easily be nixing percent, large percentages of their staff off, and I think that's an opportunity for indie agencies. We're already talking with great talents from much larger agencies that want to live in beautiful places like where we get to enjoy living out of in Maine, and others were like I don't, I don't want to live in beautiful places like where we get to enjoy living out of in Maine, and others were like I don't want to go back to the city hustle. I know I can produce good work, I know I don't need to be there, so opportunity is there for indie agencies. But I can also understand where the need to get people back in person more for that collaboration piece is necessary. But I do think there is in the middle ground, I think there is a hybrid model that works. I haven't been able to see or read or hear anything about someone who has completely put their thumb on the solution for this. But the other thing I think about too, as someone that's run an agency we own half of an old mill in Southern Maine at one point outside of Portland, and that in itself with margins getting tighter.

Speaker 2:

I don't understand how if you consolidate agencies, you're naturally and then you add in the RTO policies you're naturally going to need more space. So your operations costs are going up and that's going to put pressure on profit margins, and then that puts pressure on creativity. It puts pressure on creativity in regards to those who are involved with putting the messaging together and what they feel like they have to be able to produce to be able to keep up with those smaller margins. It also puts creativity on shops like us who there's a lot of creativity that does go into cross channel media strategy planning and buying, because fortunately we're a small enough team where we don't have this problem. But I could see where it could escalate to this point where, if your margins are squeezed, you're going to need to say, well, you need to be on channels XYZ, because at that point you're just trying to cover overhead because you have everyone in one place and your operations costs are up. So television might not be the right fit, but you might be hearing more about broadcast television again. Print might not make sense, but you have print buyers now, so you're going to have to be thinking about print. It puts a tight squeeze on everyone as naturally this is all going to increase costs for the agency.

Speaker 2:

So it's a really interesting place to be sitting and that's where, when people think about the pandemic as this thing that went by two years ago that we're out of, we are still living in the aftershock of that, and whenever someone says, oh, I remember that during the pandemic, I want to quick say like ooh, still feeling the aftershock from it. No one has yet been able to figure out how we get back to the way business was, and on that point, I don't think that's the goal, that shouldn't be the goal to get back to the way business was. Business does need to change, so it needs to change, it needs to evolve. We just haven't figured out what that is, because the pendulum swang from one area and went to the other side really quick, and now we're all just trying to figure out. What is that middle ground where we can all thrive in.

Speaker 3:

The other thing that you touched on that I wanted to talk through a little bit is you mentioned kind of the kind of the centers of influence for a lot of this consolidation moving to the coasts, and we know that there have been a lot. You know these agency networks have, you know, regional doors throughout the country and globally obviously but obviously we're talking about the United States through this conversation. Those regional partners obviously had strong relationships with you know local publications and journalists. You know, as a former journalist who often thinks about the connection between marketing spend and you know, storytelling, in particular within journalism, like how do you think the impact of this would be? How are you thinking about this?

Speaker 2:

Yeah, I think the impact is huge because what's going to end up happening as decisions get made on either coast is more news deserts are going to be popping up. Because the way to buy media when you don't have yourself ingrained in local communities and be able to, even with the largest of scale, maintain the scale needed to keep local relationships, you're going to be buying more scatter inventory. You're going to be buying more inventory that's just picking up remnant inventory that's available. So what that means is that you're buying inventory at a lesser rate than what it's. That that assembly line approach is going to make it really challenging for a lot of news organizations but also radio stations that have local talent. I mean you're already hearing more syndicated programming across local broadcast stations across the country. I know out of Portland you know there used to be an evening radio host on one of the number one stations in the market. Now we're getting more syndicated programming out of Los Angeles. So it's like that impacts not only local journalism but when people think about how local entertainment is produced.

Speaker 2:

There's a really interesting piece too that people should check out and I'll try to find it so we can link to it, but I think it happened about in September so we can link to it, but I think it happened about in September.

Speaker 2:

The Los Angeles Times wrote about the impact of news deserts and what that has on whole communities, and it was talking about community in California, where local news media went away and what that left is for a brand to pick up the pieces and they tried to start their own newsroom of sorts. This was from it was either an oil or an electric company. It was from a major utility company that made it and the impact not just the impact is across the board. It's impacted their healthcare, impacted their education system. So it's like, as people think about the importance of media and that intersection that we get to be able to sit in the middle of and between that, our storytelling and commerce piece is so important. So that is going to be something, as people operationalize these large agencies that are only going to be getting bigger should be thinking about how do we maintain a strong media ecosystem as well and really pay attention to the supply chain, because it's imperative.

Speaker 3:

Yeah, I think this maps again very, very closely to what we were talking about earlier with technology right. So, across the board, for global brands, they're going to benefit from, you know, advancements with AI, you know economies of scale, technology, innovation and this global footprint. And for regional and challenger brands, they're going to benefit from agencies that are, you know, not beholden to some of these larger entities, can really think outside of the box, not beholden to some of these larger entities, can really think outside of the box. They can work directly, you know, senior leadership to senior leadership and try and innovate and think creatively, not only to support the brand but also to support, you know, storytelling and local journalism.

Speaker 2:

So, benefits on both sides and it sticks out.

Speaker 2:

Yeah, I mean it sticks out too. I mean we've seen it, we've worked with national brands or we've helped them on both a national buy and then we've been the advocates for give us the time to properly put together the pieces here, where we've worked with numerous local markets across the country. And what really sticks out is when you do make those local connections. Do make those local connections. But again, this goes back to what we talked about earlier. It's like as margins get squeezed, as your operations because you're bringing everything together under one roof with those RTO policies, it's that squeeze on margins, that squeeze on cost is going to make it really hard to focus on local connections. But when you do, this is an opportunity for indie agencies and to what you're getting out with those regional challenger brands. I think it could provide a really great opportunity for those regional challenger brands to take their business to the next level, because they will stick out and stay above the fold when it comes to how people think of the options that they have when they vote with their dollar.

Speaker 3:

Yeah, no, I know. The question we often get is how do I not blend into the sea of sameness? And the only way to do that is to swerve where everybody else isn't. So no, well said, that's it.

Speaker 2:

We'll see what comes of it, though I mean and all of this comes from a place of you and I were cheerleading the whole industry, because I'm hoping, obviously, for the best with all of these consolidations that are happening. We have personally, we have friends there, but also we just know from a business perspective that they do that, they do lead the charge. So if they're successful, that can make it successful for indie agencies. I can make it successful for businesses up and down. So we want success for everyone and it'll be a really interesting year in how we see this shake out. Yeah, looking forward to talking about it more. Yeah, thanks, david.

Speaker 1:

You've been listening to Fireside from Campfire Consulting. Join us again by the fire as we explore more ways to connect through media. Till next time, be responsibly different, thank you.