Greg Paull
Jan 4, 2017

From new business to M&A: The year of Trump and transparency

Unknown firms dominate China’s M&A scene, WPP’s agencies lead, and Dentsu keeps shopping—a tumultuous year has left the industry feeling shell-shocked, and taking stock of what 2017 has in store.

From new business to M&A: The year of Trump and transparency

Editor's note: We'll be featuring 2017 Outlook content from the latest issue of Campaign all this week. Subscribers can see it all now in the emagazine.

So, is it over yet? Did we all survive? Best summed up at the end of John Oliver’s final Last Week Tonight show of 2016, this has been a wild ride of a year—with advertising taking on its share of the rollercoaster.

Fifty ways to read your rebate

In July, the Association of National Advertisers (ANA) in the US revealed the findings from its transparency report—with over 100 cases of media agencies incorrectly retaining rebates from their clients. Well, at least that was the assumption, since five of the six agency holding groups chose not to take part in this project. The ramifications in Asia were seen when Dentsu highlighted digital rebates retained affecting hundreds of their clients (admittedly for a small amount of money in the end — US$2 million). At any rate, with the rise of procurement, and more and more reviews and auditors, the message for agencies is now simple: earn your money fairly instead of stealing it. 

Omnicom: Great globally; so-so in Asia 

Omnicom topped its P&G win of 2015 by taking Volkswagen globally and AT&T in the US. The new ‘Hearts and science’ media agency became the ‘flavour du jour’ among the industry, even before it had hired the resources needed to service existing clients. In Asia, Omnicom had a reasonable year with two of its media agencies in the top five in the R3 Campaign New Business League, but none of its creative agencies making the top five. 

An acquisitive year for Dentsu 

At the time of going to press, Dentsu had made 31 acquisitions globally, valued at more than US$1.7 billion in investment, well ahead of WPP (US$350 million from 28 acquisitions) and all other holding groups. This included the largest independent agency in the US, Merkle (with a small foothold in Asia), and 10 other assets in this part of the world. Of all the creative and digital agencies in 2016, Isobar came closest to challenging Ogilvy’s top spot in the Asia-Pacific new business league, with Carat also performing well.

Ogilvy, Mindshare lead the way in Asia

In our new business league, Ogilvy (over 500 wins in the region) and Mindshare (close to 200) lead both their respective tables. Ogilvy has proven the value of integrated business units with its digital and other divisions performing well. Only one of its wins made the top 10 list (Coca-Cola Philippines), but it delivered the best and most consistently across multiple markets. Mindshare had a better year in Asia-Pacific this year: despite only winning half of Ogilvy’s revenue, it ropes in some important new clients, particularly in China. No other GroupM agency made the top 10 (at press time), with MediaCom hardest hit with the loss of VW. 

Unknowns dominate M&A in China again

I defy you to know any of the top 10 companies leading M&A in China in 2016. The 12th ranked group, local champions Leo Group, slowed up this year and even Dentsu was the highest-ranked you’ll have heard of, at 13th in our table (acquiring three local companies). Leading the way were Keda Group, Nantong Metal Forging Company (yes, until they invested US$371 million on three digital agencies, that was their core business) and Hangzhou-based Simei Group. For outsiders looking to make investments in China, this means a huge number of asynchronous buyers, leading more than 30 deals across a diverse group of agencies. Buyer (and seller) beware! 

Rise of the consultants 

Yes, they are coming for your clients’ advertising and digital dollars—and they are bringing their chequebooks. Deloitte, IBM, Accenture and PwC have collectively invested more than US$2 billion on the M&A trail over the past 18 months, in some truly outstanding agencies. Expect more activity in 2017 as they ‘buy their way’ into creativity.

Trump and Asia 

The ‘November surprise’ will surely have some impact on external investment into Asia. But the reality is, this internal set of investors got moving before Donald Trump. Less than US$200 million of the $3.2 billion of M&A in Asia-Pacific this year was done by the holding groups (Dentsu, WPP for the most part). To some extent, Asia-Pacific has already becomes self sufficient. How Trump ultimately impacts our advertising business seems some way off in the future. 

I, for one, finally have faith in Twitter.

Greg Paull is principal and co-founder of R3.

 

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