The Agency World Shakeup

The past few weeks have been turbulent for the creative agency industry. Thousands of talented individuals have been laid off from major agencies, including many at the senior level. Adding to the upheaval, Omnicom and Interpublic Group (IPG) announced a merger, forming a larger-than-ever powerhouse. While this sounds exciting, it likely signals more shakeups and, unfortunately, more layoffs.

Why Is This Happening?

The question echoing across my LinkedIn network is: Why? Why are so many agencies struggling right now? Having worked in agencies for years, the answer seems clear: it’s the ripple effect.

Many major businesses, including tech giants like those in FAANG, experienced layoffs earlier this year. Creative agencies, often lagging behind such trends, are now feeling the effects. As these businesses tighten their budgets, particularly for marketing and creative initiatives, agencies are left to adapt. This shift is further compounded by the industry’s focus on AI and software engineering, which continues to draw investment away from traditional creative services.

We’re experiencing a clear down market. Layoffs, tighter budgets, and rising housing costs all point to reduced economic activity. Much of this stems from the lingering business fallout of COVID-19. The free-flowing money of those years has dried up, leaving many industries to deal with the aftermath.

Will this downturn end by 2025? Probably not. Even as some challenges fade, new ones will emerge, such as the rapid rise of AI and shifting consumer behaviours. The creative agency world must evolve to stay relevant in an ever-changing landscape.