Why agencies are buying ad tech firms

A recent spate of mergers and acquisitions begs the question: why are major advertising agencies suddenly on an ad tech shopping spree?

Interpublic Group’s (IPG) turned on the faucet with its December 2024 acquisition of Intelligence Node, an e-commerce intelligence platform. IPG, WPP and Omnicom quickly followed with a deal to take on minority stakes in Mediaocean. Then, Publicis Groupe bought Lotame in March and WPP purchased InfoSum in April.

The companies themselves are clear about their motivations. “As commerce and retail media continue their rapid convergence, actionable data is paramount to maximizing brand performance,” said Philippe Krakowsky, CEO of Interpublic, in a statement released at the time IPG bought Intelligence Node.

Arthur Sadoun, chairman and CEO of Publicis, put it more bluntly when announcing the Lotame purchase: “In the age of AI, the name of the game is connect or die,” he said.

Smaller competitors seem to echo this view. “With the rise of artificial intelligence, agencies will be looking to gain any advantage they can in the hope that they will remain competitive over the market big boys — Google and Amazon,” said Sean Japp, media director at Mostly Media, a U.K. media agency.

Tim Nollen and Ross Compton, analysts at Macquarie, see a parallel with retail, where incumbents like Walmart and Target built out e-commerce and retail media capabilities to compete against Amazon.

“The agency story has always been about keeping pace with technologically enabled peers through organic investment and acquisitions and helping their brand advertiser clients manage these evolutions.”

Certainly, data is a valuable product for agencies that have rolled ad tech companies into their services through acquisitions. “Data, identity and programmatic ad buying are not only activities of the newer ad tech companies, but also services that agencies have incorporated into their offerings,” write Nollen and Compton.

“With its Epsilon acquisition, Publicis effectively acquired an entire end-to-end ad tech stack complete with data and identity,” they write. That deal positioned it well to adapt as the industry pivoted to first-party data in response to cookie deprecation.

Other holding companies are now following that playbook, snapping up ad tech firms to improve targeting and protect their revenue streams beyond the dominant walled gardens.

Still, some don’t see it so rosily.

“Agencies are snapping up ad tech to claw back control in a market that’s slipping from their grip,” says Jason Warner, managing director for the U.K. and EMEA at SBS, an ad tech platform for independent media agencies.

“Holding groups seem focused on locking in exclusive access, potentially shutting out smaller ad tech players through closed integrations.”

Warner acknowledges that these acquisitions could also “change the game” when it comes to smaller indies.

“If access gets locked down, it risks shutting out independents and creating closed ecosystems that lure clients back to the big hold companies through exclusivity,” he says.

What comes next is less about the deals themselves and more about what agencies do with them.

As the lines blur between media, commerce and data, holding groups have a shot at reinventing their value to brands.

But consolidation has consequences. The real test will be whether this wave of acquisitions drives innovation — or simply builds higher walls.