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Just three months ago, Michael Greenlees confidently predicted there would be only five major players among global agency holding companies at the dawn of the new millennium and GGT Group would be one of them.

The quick collapse of his global ambitions for 15th-ranked London-based GGT underscores the intensity of the wave of consolidation overtaking the ad agency business. Last week GGT was acquired by No. 1 Omnicom Group, New York.

Industry experts agree there will only be a handful of players in the not-too-distant future. As a result, every holding company is scrambling to join the elevated ranks of the Big Three of Omnicom, WPP Group, London, and Interpublic Group of Cos., New York. Most will fall short.


Wall Street expectations are driving the consolidation. Shareholder targets for revenue growth range from 15% to 20% per year, according to Greg Smith, managing director at investment banker AdMedia Partners.

Since most large agencies can only manage organic growth of 8% to 10% in good times, the remainder needs to be generated through acquisitions. In some cases, holding companies may even space out acquisitions, completing them in different quarters to meet specific revenue-growth goals, said Lauren Fine, an analyst with Merrill Lynch & Co.

"Omnicom has been feeding itself to get bigger and [Interpublic] needs to be fed," she said.

Interpublic is on the prowl; it's close to acquiring Carmichael Lynch, Minneapolis, and has approached Hill, Holliday, Connors, Cosmopulos, Boston (AA, Jan. 12).

In addition to buying individual ad agencies and marketing specialists, the leading holding companies are expected to continue swallowing other holding companies, as Omnicom is doing with GGT. GGT itself ingested Paris-based BDDP Group just last year.

Ms. Fine says holding companies she sees as takeover targets include Cordiant Communications Group, London; Publicis Communication, Paris; and True North Communications, Chicago, which just acquired Bozell, Jacobs, Kenyon & Eckhardt, New York.


Cordiant, the parent of Bates Worldwide, is viewed by many in the industry as particularly vulnerable since completing its demerger from Saatchi & Saatchi Worldwide, London. Although Cordiant management says it will prove its worth through performance and new-business gains, many observers remain skeptical about its continued independence.

While some see Publicis as a takeover target, it has been seeking acquisitions to strengthen its network, particularly in the U.S.

Ms. Fine said Young & Rubicam, New York, will be strong enough to be a viable independent holding company-although some industry executives express belief it could be vulnerable to a takeover once it goes public this spring. Ms. Fine predicts Young & Rubicam will make acquisitions that could keep it among the top five.

Privately held New York-based McManus Group, parent of D'Arcy Masius Benton & Bowles, N.W. Ayer & Partners and TeleVest, is another holding company with a shot at attaining top-tier ranking, Ms. Fine said.

But, she concluded, "Omnicom, Interpublic and WPP are the three I feel very strong about. Beyond that, I don't know."

Abe Jones, managing director at AdMedia Partners, said the industry has room for 10 to 12 multinational agency groups. But the top three will have a disproportionate share of market because of the momentum they've already achieved.

In addition to the current Big Three, Mr. Jones said others likely to remain major players include True North, Publicis, Paris-based Havas Advertising and Japanese giant Dentsu, Tokyo.

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