Marketing and advertising agencies serve as vital partners for brands, offering not only expertise but also digital capabilities that allow their clients to execute campaigns without having to use in-house resources. 

Most agencies help their clients with core digital marketing tactics like SEO, social media, and real-time data analysis. They also help brands counter digital challenges commonly found in the advertising industry like ad blocking, a fragmented media landscape, and privacy concerns.

This guide explores the current landscape for advertising agencies and holding companies, the key players in the space, and the challenges agency-based marketers face.

What is an ad agency?

An advertising agency specializes in creating and executing advertising campaigns for clients. They develop strategies to reach target audiences effectively through various media channels, craft creative ads, and often provide a fresh perspective to enhance a company’s marketing efforts. Their areas of expertise include market research, media buying, and creative services, making ad agencies valuable partners for businesses looking to promote their products or services.

Types of ad agencies

The gamut of ad agency types ranges from full-service to highly niche. Here are some common business models.

Full-service advertising agency

A full-service advertising agency offers a wide range of services, making it a suitable choice for businesses that are new to advertising or want flexibility across different channels. These agencies are essentially one-stop shops, handling campaign management, social media, TV and print ads, content creation, SEO, and radio commercials. They also help clients optimize their ad spend based on their target audience’s preferences.

Digital advertising agency

A digital advertising agency focuses on purely digital forms of advertising, including social media, SEO, content creation, web design and email. They excel in executing performance-based marketing campaigns, which involves paying service providers when specific goals or metrics are achieved, such as clicks, views, downloads, sales, or form-fills. This niche type of agency is focused on consistently monitoring campaign performance to inform real-time decisions and optimizations.

Traditional advertising agency

Traditional ad agencies are focused on media formats like TV, radio, and print. While traditional channels like TV still command significant budgets, they have lost some of their value in the digital age. 

That’s why many traditional agencies have expanded their services to include digital marketing, recognizing the importance of having an online presence and targeting. However, this transition has been uneven, and some may still struggle to keep pace with the rapidly evolving digital landscape.

Social media advertising agency

Social media advertising agencies specialize in growing a brand’s presence on social media platforms, offering services like brand strategy, content development, and paid social tactics. 

Recent changes, including Apple’s AppTrackingTransparency and Google’s cookie deprecation, have hindered social media platforms’ targeting effectiveness. Marketers must employ innovative strategies, like influencer marketing, to engage audiences. Consequently, agencies are actively exploring ways to adapt and ensure successful advertising campaigns and social media marketing in this evolving landscape.

greatest concerns for media investments in 2024 according to US brands and agencies
A chart that shows marketers’ targeting concerns post-cookie. (Subscribers only)

Creative ad agency

A creative agency offers a range of services, including advertising, design, and technology, with a focus on the creative execution of campaigns. That includes services like design, copywriting, video production, and more.

Media-buying agency

Media-buying agencies help businesses strategically place ads across the right traditional and digital channels to maximize audience reach and improve campaign performance. They negotiate with media outlets to secure times and locations to reach the right people at the right time, making the most out of their client’s advertising budget.

What is an advertising holding company?

A holding company owns subsidiaries that offer various services, particularly in the advertising industry, like media buying and digital marketing. These subsidiaries can work independently or together, providing comprehensive solutions to clients. 

How ad holding companies are adapting to client demand  

A 2023 survey by the World Federation of Advertisers found that single established holding companies remain the dominant model, chosen by 47% of CEOs worldwide. These traditional holding companies are valued for their comprehensive services and ability to integrate various marketing disciplines.

agency models used by the compaies of ceos worldwide
A chart showing the agency models used worldwide, summer 2023. (Subscribers only)

That said, there’s growing interest in smaller, more agile agencies that specialize in technology. Clients want more flexibility (45%) and simpler services (37%), but they also expect agency services to become more centralized (53%), per World Federation of Advertisers. This means that holding companies are facing competition from specialized agencies that are adapting to what clients want.

Pros and cons of using an advertising holding company 

Using a holding company for advertising offers benefits like a broad range of services, cohesive strategies, and better rates due to their extensive buying power. However, drawbacks include potentially less personalized service and slower decision-making processes due to their size. Brands should consider these factors, alongside their campaign needs, to determine if a holding company’s comprehensive resources or a smaller agency’s tailored approach best suits their advertising objectives.

Top ad agencies and holding companies

The rapid digital transformation across various industries has led to a substantial increase in digital ad spend and a transformation of the advertising landscape. 

This shift toward digital platforms, including email marketing, social media, and programmatic ads, has given rise to a new generation of high-growth digital marketing agencies. Traditional advertising and creative agencies are also evolving to adapt to this digitally driven landscape. 

Here are the top global advertising agencies and marketing firms, ranked by 2022 revenues, per Zippia:

  1. WPP (London, UK), $17.9 billion: A global leader in advertising offering communications, technology, and commerce services. Known for its creative transformation strategies.
  1. Omnicom Group (New York, US), $14.3 billion: Specializes in digital marketing and serving clients globally. Recognized for innovative advertising strategies.
  1. Publicis Groupe (Paris, France), $13.5 billion: Focuses on digital media and the success of its Epsilon data business. Engages in user-level cross-domain tracking.
  1. The Interpublic Group of Companies (New York, US), $10.9 billion: Houses major networks like FCB and McCann Worldgroup, specializing in various marketing disciplines.
  1. Dentsu (Tokyo, Japan), $8.2 billion: A Japanese firm excelling in advertising and public relations. Utilizes advanced data modeling for advertising reach.
  1. Dentsu Aegis Network (London, UK), $7.3 billion: This multinational company has 10 divisions, including Merkle and Isobar. Offers communication strategy services through media planning and buying.
  1. Hakuhodo (Tokyo, Japan), $6.7 billion: Japan’s long-standing advertising agency, specializing in advertising, public relations, and marketing. Serves top clients like Yahoo, Nissan, and Tiffany & Co.
  1. Havas (Paris, France), $3.0 billion: A global advertising and public relations leader, offering services from direct marketing to corporate communications. Works with clients like Jack Daniel’s, Pernod Ricard, and IBM. 
  1. MDC Partners (New York, US), $1.3 billion: A US advertising and marketing holding company, offering services from media management to analytics. Uses a partnership model where MDC Partners acquires most of its partner agency’s ownership, but lets the founder keep a share.
  1. Publicis Sapient (Massachusetts, US), $1.3 billion: A leading global advertising firm founded in 1990. Specializes in digital marketing. 

What is the future outlook for ad agencies and holding companies?

While agencies and holding companies continue to hold powerful positions in the marketing and advertising industries, their outlook is mixed. Major firms like WPP and Omnicom Group are facing revenue drops, while Publicis Groupe is growing through data services.

One major challenge is the rise of automation and AI. Although US ad agency employment recently reached a record high, there’s a concern that automation could eliminate 33,000 jobs by 2030, with AI responsible for a significant portion of these losses, according to Forrester Research.

To adapt, 57% of agencies are currently operating at a local level, per 2023 data from the World Federation of Advertisers. But it’s important to note that while in-house marketing offers benefits like more control and transparency, it also has downsides. These include limitations in human resources, potential isolation from external expertise, and a narrower skill set.

As the advertising landscape evolves, businesses need to consider their options carefully, including implementing hybrid models, to navigate the changing industry effectively.

how media agency services are currently delivered according to ceos worldwide
A chart on how media agency services are delivered worldwide, summer 2023. (Subscribers only)

What role will generative AI play in ad agencies?

Ad agencies are divided in their response to generative AI, with some embracing it through partnerships and acquisitions while others remain cautious. 

Meta, Google, and TikTok are advancing their own AI ad creation tools, which could potentially transform the role of agencies and even replace them in some aspects of ad creation. 

That said, agencies are pivoting to remain relevant, including developing exclusive tech, becoming experts in managing AI campaigns, and finding unique draws that AI cannot replicate.

Generative AI is here to stay, as it is expected to yield $1.3 trillion in revenues by 2032, according to Bloomberg Intelligence, gaining prominence in areas like content generation and copywriting. Agencies will also focus on targeting and measurement, seeking a balance between leveraging AI’s capabilities, using human creativity, and preventing legal issues.

genai revenues worldwide
A chart about generative AI revenues worldwide, 2023 to 2032.(Subscribers only)