WPP’s decision to merge heavyweights Burson-Marsteller and Cohn & Wolfe into a top three PR firm has shaken up the agency landscape, and experts warn other holding companies are likely to follow suit with their own shops, reports PRWeek, which added that it makes sense “that all of the businesses WPP operates would be subject to this,” says Pivotal Research analyst Brian Wieser. “It has been looking for efficiencies where possible, and so where agency brands are not sufficiently differentiated, holding companies are looking at combining them and finding ways to create walls or otherwise satisfy client concerns about conflicts.”
“Alex DeGroote, media analyst at Cenkos Securities in London, expects more PR agency consolidation within the holding company giants.
“”Investors are worried about all of the big holding companies. Their share prices have been under intense pressure,” he says. “We think this will continue.”
With Facebook, Apple, Amazon, Netflix, and Google transforming the way clients spend marketing dollars across disciplines, “there is no growth, so massive restructuring is underway,” DeGroote adds.
“”It’s all about cost savings. PR is WPP’s smallest division, but its revenue trends have been negative and North America is a real concern. So change is needed,” he says. “Can PR demonstrate ROI for clients in 2018? That is the challenge.”
Read more here.
While this post focuses on pending agency changes, it should present a red flag to the larger communications community about the fundamental changes and challenges that await all communicators in the future.