|A wave of ad industry consolidations has left smaller ad agencies and holding companies high and dry, John Dooner said.
Interpublic Chairman-CEO John Dooner painted a picture of an advertising industry now ruled by giants and offering little hope for smaller players.
"It's going to be tough sledding for anyone else to enter this game," he told the crowd at the Ritz-Carlton, Laguna Niguel.
82% of U.S. billings
Mr. Dooner said the four largest agency holding companies control 55% of global ad billings and a stunning 82% of U.S. billings. In the past year, he said, agencies owned by those companies -- Interpublic, Omnicom Group, WPP Group and the soon-to-be-merged Publicis Groupe and Bcom3 Group -- won 95 out of 100 advertising account reviews tracked by Interpublic.
He said the challenge now is for the holding companies to figure out how to leverage the operations they have acquired across marketing platforms to benefit clients.
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Getting the mix right
"The one that gets the mix right wins the game," he said.
Yet Mr. Dooner cautioned that while the major players have built or bought competence and global reach, they've got a long way to "go to deliver what's really necessary" at the right price.
Mr. Dooner recommended agencies operate by what he called the 80/20 rule: "If the agency is doing good work, it is fair to expect that 80 cents of every revenue dollar should be reinvested to better serve clients and 20 cents should go into your own business and additional services -- as well as to your shareholders."