In late 2020, Procter & Gamble got a shock. WPP, the holding company that owns Grey, a 103-year-old agency behind many of P&G's most iconic campaigns, announced it was merging Grey with digital agency AKQA. P&G's Chief Brand Officer wasn’t pleased. To him, this felt like losing a trusted ally overnight. He called WPP’s CEO directly, concerned that Grey's identity (and focus on P&G) might vanish. WPP responded quickly, promising that Grey would remain "for as long as it makes sense."

But the damage was done. It wasn't just about the name. It was about trust. And it sent a warning shot through the marketing world: Are clients just collateral damage in the holding companies' race to consolidate?

The Merger Wave

The last five years have been a whirlwind of consolidation. WPP folded J. Walter Thompson into Wunderman, creating Wunderman Thompson, and combined Y&R with VML to form VMLY&R. By 2023, WPP merged Wunderman Thompson and VMLY&R into one behemoth: VML. Publicis followed suit, merging Leo Burnett and Publicis Worldwide into a new mega-agency dubbed "Leo."

Dentsu, too, collapsed multiple agencies into a single network. Interpublic Group (IPG), once cautious, merged with Omnicom in a $13 billion deal in late 2024—forming the largest ad holding company in history. The stated reason? To break silos and unify services for clients. But is that really who benefits?

Who Gains, Who Loses

Omnicom boss John Wren with IPG counterpart Philippe Krakowsky

On paper, mergers promise integrated services and increased efficiency. But in reality, they're often about trimming fat. Consolidation is a cost-cutting strategy dressed in synergy talk. Take the Omnicom-IPG merger: the goal was to save $750 million, largely by cutting jobs and eliminating overlapping roles.

Those "savings" often come at the expense of client service. Veteran creatives and account leads who know a client's business inside and out get let go. New faces shuffle in, institutional memory fades, and clients end up feeling like they're starting over.

WPP's consolidation spree is a case in point. After founder Martin Sorrell's departure, new CEO Mark Read faced immense pressure to turn things around. Mergers were his answer. Out went legacy names; in came streamlined mega-brands. The motivation? Not creativity. Not client needs. Just financial results.

Publicis is no different. The creation of "Leo" wasn't just a creative reboot—it eliminated duplicate roles and regional offices. And the $4.4 billion acquisition of Epsilon? A play to bundle data and marketing under one roof and upsell clients.

Clients may hear promises of integration and innovation but often experience instability and impersonal service.

The Conflict Conundrum

Mergers also raise age-old red flags: conflicts of interest. Traditionally, if one agency handled Coke and another Pepsi, they couldn't coexist under one roof. Consolidation tests those boundaries.

Holding companies insist they can manage conflicts through "siloed teams" and internal firewalls. But clients aren’t always convinced. When WPP merged Grey (which handled P&G) with AKQA (working with Nike and Netflix), P&G feared its interests would get sidelined in favour of flashier digital accounts.

The lack of transparency only fuelled suspicions. Grey employees said they were blindsided. Clients found out through press releases. WPP had to scramble to reassure key partners.

This isn't unique. Agency mergers often look like internal moves, but they directly impact clients. The failure to loop them in early and manage transitions carefully risks losing trust—and business.

Client Churn and Lost Focus

When agencies merge, long-standing client teams can vanish overnight. The team that once knew your brand inside and out is gone, replaced by a faceless committee. This upheaval leads to churn. Brands quietly take their business elsewhere.

At smaller agencies, clients are top priority. At a mega-agency, they're one of hundreds. Marketers report that as agencies grow, they become bureaucratic and lose their creative edge. The spark that attracted clients in the first place fades.

This dynamic opens the door for independents. Smaller agencies pitch themselves as nimble, focused, and hungry—everything the bloated giants aren't. As the mergers continue, more brands are turning to these boutiques for tailored service and fresh thinking.

Culture Clashes and Talent Drain

Agencies aren't just logos; they're cultures. Mergers disrupt that. When two different ways of working collide, morale often tanks. Founders cash out. Leaders leave. Top talent walks.

At Grey, employees felt demoralised as AKQA was positioned as the dominant brand. At Leo Burnett, the merger with Publicis Worldwide created leadership reshuffles and internal uncertainty. These shakeups hurt creativity. A demoralised team doesn’t produce breakthrough work. If key creatives leave, clients notice.

Some argue that strong agency cultures can survive mergers. Ogilvy, for instance, remains a powerhouse despite its history of consolidation. Publicis CEO Arthur Sadoun insists that mergers can amplify creativity, not stifle it. But that outcome requires thoughtful integration—not just slapping logos together.

What Clients Can Do

So, what now? Clients can't stop holding companies from merging. But they can demand transparency, accountability, and continuity.

They should be notified of potential mergers before the press is. Contracts should spell out how resources will be allocated post-merger. Clients must insist on clarity about who leads their account and how service will be maintained.

And they should feel free to walk. Loyalty only goes so far. If a merged agency can't deliver, plenty of independents are ready to step up.

Final Thoughts

Agency consolidation isn't inherently bad. When done right, it can unlock new capabilities and drive innovation. But too often, it's driven by investor pressure, not client value.

The ad world is at a crossroads. If holding companies want to keep client trust, they must prioritise service, talent, and transparency over cost-cutting. Otherwise, the very clients they claim to serve will leave them behind.

Because in this business, bigger doesn't always mean better. And clients aren’t pawns in a financial chess game. They're the reason agencies exist at all.