Agencies Are No Longer Buying Capabilities

Publicis acquired LiveRamp. Ogilvy invested in sports and creator-focused agency Article 41. Earlier this month, Accenture Song acquired creator and social agency Whalar.

At first glance,
these transactions appear unrelated.

In fact, many industry observers might view them as duplicative. Why acquire a creator agency when you already have creator capabilities? Why buy another
data company when you already have data expertise? Why invest in a specialty firm when you already operate in that market?

The answer may be that we’re evaluating today’s
acquisitions using yesterday’s M&A playbook.

Viewed collectively, these transactions suggest the agency industry may be entering a new era of M&A.

Historically, agency
acquisitions have followed a relatively predictable evolution.

The first was the Scale Era.

For much of the 1990s and early 2000s, acquisitions were primarily about becoming bigger.
Holding companies expanded geographically, added clients, increased billings, and consolidated operations. The rationale was straightforward: scale created competitive advantage.

Then came the
Capability Era.

As digital transformation accelerated, agencies found themselves needing expertise they didn’t possess. Social media, CRM, analytics, commerce, performance marketing, and
digital experience design became essential capabilities. Acquisitions became the fastest path to modernization.

Today, however, a new dynamic is emerging.

Welcome to the Speed Era.

The most important question driving acquisitions is no longer, “How do we become bigger?” Nor is it simply, “What capability do we need?”

Instead, it is:

“What strategic objective do we need to achieve, and how quickly can we get there?”

That distinction fundamentally changes how acquisitions should be evaluated.

One of the most common criticisms of agency acquisitions is that they appear duplicative. But that criticism assumes acquisitions are intended to fill capability gaps.

Increasingly, they
are not.

They are being used to eliminate growth bottlenecks.

A capability may already exist within the acquiring organization. What may not exist is the market position, geographic
footprint, reputation, client access, talent network, or speed required to achieve strategic objectives.

In the Scale Era, overlap was viewed as inefficiency.

In the Speed Era, overlap
can be acceleration.

Consider Publicis’ acquisition of LiveRamp. Publicis already possessed significant data and technology capabilities. The acquisition wasn’t about checking a
capability box. It accelerated access to identity resolution, data infrastructure, and the foundation increasingly required to compete in an AI-driven marketing ecosystem.

The same logic
applies to creator-focused acquisitions. Accenture Song’s interest in Whalar and Ogilvy’s investment in Article 41 are not evidence that either organization suddenly discovered the
importance of creators, social media, or influence. Rather, they represent a faster path to talent, relationships, cultural relevance, market position, and credibility in rapidly growing segments of
the industry.

The same dynamic extends beyond the industry’s largest players.

We recently advised on the acquisition of BARÚ Advertising by Fors Marsh, one of the leading
independent research and communications firms in the public sector market. Fors Marsh did not need additional communications capabilities. What the acquisition accelerated was access to
California’s state government market—one of the largest, most competitive, and most relationship-driven communications markets in the country.

That’s what makes these
transactions so interesting. The assets being acquired are different. Data infrastructure. Creator ecosystems. Sports and NIL relationships. Market access. Industry reputation. Client
relationships.

But the objective is often the same: accelerating a strategic outcome that would take years to build organically. Many of the most valuable assets in today’s agency
landscape cannot simply be hired or built. They must be earned. Trusted relationships. Market credibility. Geographic presence. Industry expertise. Access to high-growth sectors.

These
advantages often require years—or even decades—to develop organically. Acquisition compresses that timeline.

As AI continues to reshape the competitive landscape, that compression
is becoming increasingly valuable. Organizations no longer feel they have five or ten years to establish a position in an emerging market, build credibility in a new sector, or develop differentiated
advantages. Competitive windows are shrinking. Market shifts happen faster. The cost of waiting is rising.

That reality is changing how leaders think about growth. The next wave of agency
M&A may not be defined by who acquires the most revenue or even the most capabilities. It may be defined by who most effectively identifies the bottlenecks standing between where they are today
and where they need to be tomorrow.

The most successful acquirers won’t necessarily be buying companies. They’ll be buying time.