Ad agency subtract agency: Shubhranshu Singh writes from Cannes Lions 2025

"Mad Men built the brands. Ad Men chased trends. Will Sad Men scroll through the ruins?”

In 2001:

- Mark Zuckerberg was in high school

- Google was a startup

- Smartphones didn’t exist

- BlackBerry was emerging

- The iPhone was 6 years away

- Computers were mostly desktops

- No Facebook, Twitter, YouTube, or Instagram.

At that time, digital advertising made up less than five percent of global ad mix.

Back in 2001, digital felt like a dial-up modem — noisy, slow, and clunky. It held promise, but lacked the speed, fluidity, and mobile-first intelligence of today’s always-on, data-driven world.

Cut to the present day - Global Ad Spending in 2023, hit US $ 1 trillion (excluding China). Of this, digital advertising accounted for ~ 75 percent of all global ad spending in 2023.

More noteworthy is the fact that digital’s share grew from about 55 percent in 2019 to 73.3 percent in 2022 and to 75+ percent in 2023, indicating a steady rise.

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The United States with approximately $265 billion is the top digital ad revenue market. Alphabet & Meta together are at nearly 50 percent of global digital spends highlighting both their massive reach and clout.

As more advertising money shifts online, an even larger portion is being captured by Google and Facebook, which last year absorbed 90 percent of all new digital ad spending.

Their share of the global digital advertising market is expected to reach around 70 percent in the coming years.

Video-streaming, is primed up for an advertising revenue bonanza. As the streaming wars heat up, subscription-based services will also sell commercials to fund their investment in new content.

Amazon is still a distant challenger in digital ads but growing fast, feeding off Google's search business as online product searches now happen on Amazon. Effectiveness is its differentiation. Shoppers come to the site ready to buy and data allows it to target consumers well. Advertising dollars will eventually pour in via Amazon Prime video as well.

Advertisements serve a clear economic purpose. Companies offering goods and services must inform potential customers about what they provide and why it’s appealing. Advertising helps consumers make more informed choices benefiting both businesses and buyers more than if no advertising existed at all.

This theory held for almost a century.

Then, the digital sunrise happened. Legacy media talks TO audiences; digital media talks WITH them, then follows them, tracks them, and sells to them.

In the old days, marketers decided WHAT to show consumers, WHEN to show it, WHERE to show it and HOW to show it. Today, consumers decide what they want to see, when they want to see it where they want to see it and how they want it to be shown to them.

Everything changed beyond a recognisable mutation.

In every other era, the change was in one area or the other. E.g - content (Print to Radio to TV), modalities (D2C, B2B) or consumer habits.

With digital, everything was changing simultaneously at warp speed. The result is the ongoing reshaping of Madison Avenue.

The biggest evidence is the Omnicom’s takeover of Interpublic, the coming together of the world's third and fourth-largest ad-agency holding companies by revenue. But will it shift advertising's centre of gravity closer to New York?

The global “ad-agency industry” has grown by barely three percent a year since 2018, according to best estimates. This is simply not sustainable.

There is a structural issue. Generally speaking, large advertisers and corporations want to shift their creative and media duties to better, but cheaper, providers.

On the other hand, cost of doing business, injestion of technology and the provision of better services means ‘talent, tech & table stakes’ are becoming more expensive for these agencies.

Artificial intelligence (AI) threatens to erode their role further. AI tools are making it easier for clients to take advertising in-house, or give the work to smaller agencies.

Holding company bosses need savings by merging shared functions, and provide cash to invest more in AI technology.

Perhaps more likely is that agencies push further into new kinds of work. The "holy grail" in the industry is combining ad-buying with data analysis. Now agencies are competing more closely with consulting firms, which in turn are venturing into the ad-content business, with offshoots such as Accenture Song.

The part of the advertising industry that seems most vulnerable is the erstwhile ‘creative core’.

Shubhranshu Singh is CMO, Tata Motors CVBU. He writes Simply Speaking, an exclusive column on Storyboard18. Views expressed are personal.

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