Michael Kassan, one of many media and advertising business’s most influential dealmakers and the pinnacle of advisory agency 3C Ventures, anticipates one other company holdco mega-merger on the close to horizon.
“I don’t suppose they’ll proceed with out some consolidation,” Kassan speculated of the holdcos in an interview with ADWEEK at Kassan’s 3CV Plage at Cannes. “In case your query is, Michael, ‘If we’re sitting right here subsequent 12 months, suppose there’ll be one other one?’…I believe so.”
The prediction comes as Omnicom’s deliberate acquisition of IPG—a $13.25 billion deal set to shut within the second half of this 12 months—faces rising scrutiny. The U.Ok.’s competitors watchdog has launched a probe into the transaction, whereas the U.S. Federal Commerce Fee has issued a second request for info.
Kassan, for his half, believes that the Omnicom-IPG deal will undergo. “It’s a deal that ought to shut. There’s not an antitrust difficulty right here,” he mentioned. “Hopefully it doesn’t get political.”
Exterior of Omnicom and IPG, the largest company holding corporations and networks embody Publicis, WPP, Dentsu, S4, Havas, and Stagwell.
Kassan’s high-level prognosis: all of the holdcos are feeling the strain.
A part of that is because of strain to ship good margins, he mentioned. Whereas companies have advanced their income fashions, shifting past a fundamental payment construction and embracing streams like principal-based media shopping for (the place the company buys media and sells it to the consumer at a better charge), they’re combatting margin pressures.
“Consolidation goes to make sense,” he mentioned. “Again workplace, the economic logic of consolidation is extra applicable now than it’s been in a very long time, as a result of marginal strain is actual.”
And whereas inner consolidation on the holdcos has accelerated—WPP, for example, introduced collectively VML and Y&R with Wunderman Thomson below the VML model, whereas IPG married FCB Well being and McCann Well being into the unified IPG Well being model—this sort of trimming gained’t be sufficient, Kassan mentioned.
“It’s going to get powerful,” he mentioned. “There’s extra to come back there.”
