Ad Agency Trends To Watch Out For in 2025

This year is going to be significant for Adland.

2024 saw many agencies begin to plan for what is coming, upping their technological capabilities through partnerships and developing inhouse tools. Many changed leadership in both the C-suite and creative departments, hoping that new blood, ideas and connections would be a futureproof measure that would make an impact even in the short term.

An array of obstacles lie ahead – some new, some as old as the industry (and indeed business) itself; from budget uncertainty and project delays to tight deadlines and uncompromising clients and the rise of AI – the list of challenges is long.

Following a year in which ad spend surpassed $1 trillion in total revenue worldwide and is expected to further climb 7.7 per cent in 2025 to $1.1 trillion, it’s perhaps surprising that the sector is not more upbeat for its near-term future. Yet the impending $13 billion merger of Omnicom and Interpublic Group will forever change the agency landscape worldwide. And while it will take some months for the deal to be completed - and even longer for the end result to be in place - agency consolidation across the two groups seems inevitable.

Indications for Adland 2025

Various reports indicate more positive signs for the ad industry going into this new year, although Gartner is a notable dissenter. Its research found that in 2024, average marketing budgets dropped from 9.1 per cent of company revenue in 2023 to 7.7 per cent last year. It is also not confident of a recovery for 2025.

However, WARC has revealed that two out of three (65 per cent) marketers expect business to improve this year, though the ongoing geopolitical uncertainty continues to contribute to unease about whether that increase will come to pass. Just a third (34 per cent) of marketers expect budgets to go up, while 22 per cent expect them to stay largely steady. Moreover, how much of that spend reaches beyond the tech platforms is another concern. Agencies are less positive – just over a quarter (28 per cent) expect budgets to increase.

And of course, the rise of artificial intelligence (AI) means that marketers are looking closely at what it will do to improve the power and efficiency of their future communications. “I envision GenAI enabling all brands to embrace ‘true’ full-funnel communications,” states Becky Verano, vice president of marketing at Reckitt. “We will be able to move away from the standardised 'matching luggage', to more complicated and intricate content, that amplifies the creative ideas that appeal to our consumers on different platforms. Now that's exciting!”

According to McKinsey, companies that have invested in their digital and AI capabilities are currently outperforming their peers across various industries. The same is true of advertising, where the drive to adopt AI has been widespread.

Elsewhere, Mintel Consulting has christened the drive by marketers for data and analytics as ‘Personalisation Renaissance’. The consultancy believes that fuelled by consumer expectation, even more brand communications and messaging will be tailored direct to individual users as they increase their understanding of consumer needs.

The ability by brands to actionably leverage their data to improve customers' experiences will deliver key competitor advantages, the Mintel report states, with AI tools then able to action that. Agencies will already need to ensure they are capable of delivering more personalised data insights in order to meet many current client expectations.

Away from the impact AI is having on agency services, it is also changing agency partnerships and payments too.

According to research from the World Federation of Advertisers (WFA), three-quarters of advertisers plan to change their compensation models over the coming three years, while alarmingly over half (58 per cent) plan a fee reduction directly connected to the deployment of AI.

The fight for attention in an increasingly efficiency-driven economy will also be tenser, and marketers should be prepared for AI to play a large role in navigating this. Kantar’s Marketing Trends report revealed that most marketers (68 per cent) are positive about the effect the tool can have on their teams. Kantar’s research also showed that over a third (36 per cent) don’t feel their teams have enough relevant skills to understand and use AI.

The same study discovered that 41 per cent of marketers also planned to increase their investment in retail media this year.

Kantar UK’s head of creative excellence, Lynne Deason reveals that its data underlined a need for more media consistency and integrated campaign development that stays true to creative platforms over time

Deason adds that brand centricity will continue to play a key role in campaign stickiness: “Cohesion not only fuels campaign effectiveness, it is also a catalyst for creating meaningful difference and driving brand growth. Brands exist as a set of associations in people’s heads. The greater the clarity of those associations (especially when they make the brand feel more meaningful and different than others), the more predisposed people will be able to choose the brand over other alternatives.”

New business pitches rebound

Last year was a difficult year for new business pitching. After an initially busy period for ad pitches during the first quarter, says the AAR, there was a slowdown leading up to the UK election, with activity falling by over a fifth (21 per cent) during the first half of the year. Media pitches saw less of a decline, at 4 per cent down during that period.

"New business in 2024 seemed to be high frequency, low-value pitching, which still commands a lot of agency investment. With political and economic uncertainty, the market has continued to feel slightly unsure of itself," says Hannah White, managing director of New Commercial Arts.

A number of pitches are on-going as 2025 kicks-off, including reviews from major brands such as Santander (global creative and media), Barclays (creative), Asda (creative and media), Ladbrokes (creative) and Primark (social media).

Churn amongst CMOs didn't help matters, and the rise of the fractional CMO - up 21 per cent last year LinkedIn revealed to Creative Salon, - compounded the stagnation. New business directors have said that they hope to see a sizeable increase in pitches now as marketers return to take up new full-time roles.

More good news comes from Ingenuity, which recently ran a survey of 500 senior marketers based in the UK, all of whom work for brands that advertise on TV. More than two-thirds (69 per cent) say they would definitely be pitching in the next 12 months while 28 per cent say they would potentially follow suit.

“Couple this with the fact that marketing spend will reach a record high of £40 billion before year end (double that of Germany, our closest European competitor) and you’re left with one simple question: Will the way we all think of ‘the pitch’ in 2025 continue to be defined by what has come before, or will it be more progressive, agile and bespoke to the needs of the brief?” Ingenuity+'s executive director Richard Robinson queries.

Closer ties between media and creative

The introduction of Gen AI could be set to further drive down the amount agencies are able to charge for creative development and production, perhaps fuelling a partial return to an integrated full service model with media at the forefront.

According Forrester’s vice president and principal analyst Jay Pattisal, the year ahead will see a third of digital media specialists evolve into full-funnel agencies. Furthermore, CRM agencies are also expected to transform into customer experience agencies.

“Barely half of US CMOs plan to integrate performance and brand media assignments, and over a third plan to integrate creative and media assignments in the next 12 months,” states Pattisal.

Ahead of the curve, T&Pm was formed last year by consolidating The & Partnership and mSix with this philosophy at its heart. This was just months before WPP acquired the shares it did not already own in the agency.

“Looking back, I’m not sure whose idea it was for our industry to separate creative and media agencies, but I’m sure the motives were more profit- than client- driven,” Johnny Hornby, founder and CEO of T&Pm, said at the time. “If that separation ever made any sense, it certainly doesn’t today. Modern brands need to connect the dots, brilliant creative thinking can’t be divorced from the smart media systems that bring it to life, all of which can now be personalised at scale by breakthroughs in AI.”

If adspend is set to reach over $1 trillion, then media will certainly be in the driving seat for the foreseeable future and we could see more agency integration across the networks to create new full-service offers.

“We firmly believe that the agency world can never be siloed again, it just doesn’t make sense to separate creative and media – you need a single team to provide a lens on both. It opens up new brand storytelling opportunities – to do mass customisation at scale, to do immersive storytelling and bespoke on-demand content. And then it drives effectiveness and efficiency through the whole content creation and distribution experience. It’s not a miracle solution, but its impact reaches far and wide,” believes T&Pm partner Sarah Golding.

Further elaborating on why this trend is being anticipated, VCCP Media’s CEO James Shoreland says that clients have been wondering, in a world of ‘badvertising’, why their marketing investments have increased while their return on investment has declined in terms of audience recall. With the increasing scrutiny of procurement departments, marketers are demanding more for their money. They want deployment at speed, and they want it at the lowest possible cost – and technology is the key factor in delivering that for agencies.

“The market is oversupplied with agencies that can serve that need. For those agencies the immediate future is all about consolidation, not integration,” he continues.

Following Serviceplan's acquisition of Total Media last year, the group is now looking to bring its House of Communication model to the UK, and that may well mean making a creative play to sit alongside its UK media operation. It will be interesting to see how closely this new offer will align media and creative services.

Mergers and Acquisitions, and increased focus on what clients and want

A constant topic of conversation in advertising is the changing agency model. You can set your clock by someone each year writing a thought piece shouting that it’s time for change as though all agencies were built the same.

It used to be that the significant differentiator was the human factor – the brains within each agency and what they could bring to clients. To some extent last year that changed and technology moved closer to the driving seat. But the humans are still in charge – they are now figuring out what works and it’s a classic case of flying the plane while rebuilding it, and that is true for most of the agency sectors. Publicis Groupe would claim (perhaps rightly) that it is is well ahead of the game with its Power of One positioning and now everyone else is catching up.

Omnicom’s acquisition of IPG will mean 'the Big Six' agencies become 'The Big Five' (WPP, Publicis Groupe, Dentsu, Havas and the resulting merged entity from Omnicom and IPG). But don’t discount the continued march of Accenture Song.

Matt Lacey, partner at M&A consultancy Waypoint Partners, says: "If it’s passed by the relevant authorities, the IPG/Omnicom behemoth will inevitably lead to talent and even some famous agency brands looking for a new home. Seeing a precedent set by 'escapees' from this mega integration, other high-quality agency brands/talent might start wondering if they’re in the right home and whether they’d be better off as independents or within a structure that allows for more flexibility. After all, the last couple of years have been tough for our industry and that, combined with the kind of seismic change we’re seeing take place in the agency landscape, triggers a lot of soul-searching.

"In addition, the various layers of political, social and economic uncertainty and instability in the last year or so have contributed to a sub-optimal environment for investor exits. With many investments in the sector now into maturity, we expect to see more scaled businesses in the market during 2025. This coupled with potential corporate carve-outs, opens up more opportunity for PE investors – after a period of relative scarcity of larger-scale investment opportunities," he adds.

Should another of the major networks look to acquire in response to the Omnicom deal, it would not be a huge surprise although potential sizeable targets are few and far between. Perhaps mid-level networks will become more appealing, especially with The Mission Group having rebuffed moves last summer.

Meanwhile, there is hope among the independent agency sector that perhaps the mega agency merger will be good news, as more clients look for a more nimble service- either not seeking their scale or are unwilling to meet their costs.

And let's not ignore that question of talent. Much of the value of any agency business resides in the talent it has to sell to clients and with the various executive level moves that took place across last year, the leadership landscape already looks quite different from this time in 2024. More change lies ahead too. McCann London is figuring out its own leadership with the departure of Polly McMorrow to join Richard Brim and Martin Beverley, the out-going CCO and CSO of adam&eveDDB, in a new start-up.

The union of New Commercial Arts and Ogilvy will no doubt spark some changes as James Murphy and David Golding get stuck in. And that's all before we start to feel the impact of the Omnicom/IPG merger.

More Training and upskilling

Following the pandemic, there was a hiring spree as client spend surged and demand for talent was instant. But the market has changed drastically since then and continues to morph. Global economies will have to adapt to the increasing demand for skills and experience around AI and data handling, reshaping what the labour force will look like in terms of talent and employer needs. So it's no surprise that upskilling has already become a key priority for agencies.

"One thrilling – and scary – thing about today is that so many of the jobs that will exist in the future have yet to be invented. So when hiring an entry-level person it’s more about their capacity to learn than what they already know. Recruitment is about finding people who are curious, adaptable, and believe that learning is a process that’s permanently unfinished," reckons Grey London's president Conrad Persons.

Unsurprisingly, hiring expectations are also changing too. Richard Arscott, the UK CEO of Revolt, says the traditional characteristics looked for in new hires - such as values, character and skillsets - remain core. But he also believes that will change with the next generation.

"What you look for today in technical skills will probably be out of date in three or five years time," Arscott explains. "Certainly, you are looking for how people use AI and what role they see it playing, but what remains true and is at the heart of what we do, is that you are also looking for how people can arrive at and judge great creative ideas."

The quickest fix for agencies to bring in the best talent and required skills at scale is still the merger and acquisition route, with significant strategic deals continuing to be sought in the data and digital space this year.

However, the automation of the workforce is already taking place. Forrester claims that across US-based advertising agencies nearly a third of automated jobs will be done by Gen AI over the next five years. This year will continue to see the creative agency as we know it change in readiness.