Agency Growth Forecast, Share Losses For HoldCos, GroupM Under The Spotlight, an Interview With TripleLift and M&W's New Hires!
Madison and Wall: Saturday Summary for June 15, 2024
Ahead of the Cannes Lions, this was a big week for agency-related analysis from Madison and Wall. First, on Tuesday we published a new forecast for agency services revenue growth in the United States. Although agencies who are struggling with their tech clients’ “years of efficiency” might beg to differ, there was growth last year in the US at approximately 4% excluding political agency revenues and 1.6% including them. Growth should accelerate on an underlying basis in 2024 and beyond, which we specify further in our forecast.
Next, on Wednesday we provided some additional data and analysis to calculate the shares of marketer spending on agency services the largest traditional holding companies capture. What might be surprising to some is that their market share has been declining in the US (and likely elsewhere), from a peak of close to 40% in 2015 down to 29% in 2023. As we’ve argued previously, the primary factor causing this outcome has been their disinvestment in the business by means of capital returns to shareholders and limited capital expenditures for both organic and inorganic growth, at least relative to what would be needed to maintain market share.
On Thursday came an extensive and well-researched report in Ad Age on WPP’s GroupM, the world’s biggest media agency group, exploring the sources of its challenges in recent years. There were some debatable points on the topic of scale in media agencies and additional considerations related to the ways agencies silo their operations as they do which we explored along with additional color (based upon publicly available information) in our own in-depth note that came out later in the day.
Outside of the agency sector, on Friday we published an interview with the CEO of TripleLift, Dave Clark, to explore what’s new with their business. As a leading ad tech company they have a helpful read on important digital trends, including what the winners of the open web will need to do well given the challenges we observe many of those publishers face.
But the biggest news from the past week as far as Madison and Wall is concerned was the announcement that we have made two key hires! Jose George and Olivia Morley are joining as senior analysts. Jose has extensive experience in media buying, media selling and marketing while Olivia is a well-known journalist in the industry who focused extensively on the agency and services side of the business. As we apply their knowledge to our financial analysis-driven approach to studying the industry, developing data sets and providing consulting and advisory services, we’ll improve our existing offerings and pursue new initiatives to make our work even more valuable to clients.