Wieden aside, the most interest is in creative shops with under 100 employees “where you’re getting the best creative ideas,” Allen said. One small agency CEO told Ad Age he received several serious inquiries every month last year compared to one inquiry every few months the year prior.

Majority, an Atlanta hotshop, sold a 30% stake to WPP in June, the same month &C sold a minority stake to Serviceplan Group. In July, creative hothouse Uncommon sold a majority stake to Havas.

It’s the midsized agencies of between 200 and 500 employees that are “really suffering,” Allen said.

The advertising executive at a consultancy who spoke on condition of anonymity said midsized agencies are a hard sell because they come “with a price premium. With AI, the scale you used to get with agencies, it’s already being automated. I just don’t see long-term liability for mid-sized agencies. [They are] not relevant. That’s the hard truth.”

Who’s doing the buying

While big creative agencies have lost some of their luster, there is still a lot of value in the U.S. advertising sector and offers are coming from several different types of buyers, including traditional holding companies that continue to do deals, PE firms, consultancies and global players looking to expand their footprints.

Consultancies are expected to invest in more design, creative and front-end capabilities, while holding companies are anticipated to invest in more back-end and tech capabilities, according to Seidler, who pointed to S4 Capital’s merger with tech company TheoremOne in 2022, a deal inked with Madison Alley’s assistance.

Stagwell Chairman and CEO Mark Penn said he will be looking to be “more aggressive” in the marketplace in the new year, seeking international and larger-scale deals.

“We decided that the prescription drug industry was something that we wouldn’t achieve scale at and that somebody else would probably do better and that we could go ahead and buy out, take the funds, and turn it into three or four purchases,” said Penn.

In the same month, Stagwell acquired Left Field, an agency that specializes in providing digital solutions via AI, as well as other technological approaches such as VR and experiential design. Later in 2023, Stagwell snagged TikTok agency Movers + Shakers along with culture and experiential agency Team Epiphany.

Reshaping the holding company

Other holding companies are also shedding some assets. In 2023, along with IPG divesting Deutsch New York and Hill Holliday, Publicis sold its stake in Burrell Communications to a PE firm and Omnicom sold two of its agencies, C Space and Hall & Partners.

There will be more holding company pruning to come, predicted Allen. He said IPG has “too many [agency] brands,” which is not attractive to clients seeking simplification. He said that he wouldn’t be surprised if more of IPG’s underperforming agencies were sold off or merged.

Clients “don’t need to be working with a holding group with multiple P&Ls all fighting for the same slice of the pie,” Allen said.

IPG did not comment by deadline.

All eyes will also be on Havas Group. Its parent, French media company Vivendi, has been exploring options to split up its company, which also includes Havas siblings such as Canal+Group.”

Pattisall said he expects Havas’ media and creative assets to be split and sold to different buyers. “I could see one of the consultancies being interested in Havas Media Network,” Patisall said. “There is a bigger question mark for Havas Creative; there is not as big an appetite for those acquisitions.”

One executive of an ad network that is acquisitive said he could see Vivendi exploring a sale of Havas with French holding company Publicis Groupe. The executive said he’s not sure how it would look to spin off some of the Havas assets.

“The idea to spin it off goes against the strategy they have been pushing about all the benefits of integration with Vivendi, etcetera,” this person said, “and its numbers have been pretty poor, so it’s not going to look good as a public company standalone.”