Private equity is taking a growing interest in independent agencies as investors look to capitalise on shifts in media spending, AI and retail performance.
That was one of the clearest messages from a panel of agency partners and suppliers at a sold-out AdNews L!VE Sydney, where leaders from Squad M&A, Audience360, Blis and Perion discussed the opportunities and threats facing agencies.
Squad M&A CEO and commercial partner Virginia Hyland said investor appetite is growing as private equity firms look beyond traditional media channels and towards emerging areas of growth.
“In the last year we’ve seen about 10 deals get done, and some you won’t even hear about because private equity involvement often isn’t publicised,” she said.
Hyland pointed out that investors are examining where advertising dollars are likely to flow over the next five years, particularly around retail media, performance channels and AI.
“Deloitte is saying that $1 trillion of retail sales are going to be influenced by AI agents,” she said.
She added private equity firms are increasingly looking to build groups of complementary businesses rather than simply acquire scale.
The opportunity extends beyond M&A activity. Hyland said buyers are looking for agencies that have invested in technology and operational capability, not just productivity tools.
“Buyers aren’t just looking for businesses using ChatGPT to create efficiencies. They’re buying businesses that invest in infrastructure,” she said.
The discussion repeatedly returned to a common theme: agencies face pressure from clients bringing capabilities in-house, the growing influence of global platforms and rapid advances in AI.
Audience360 managing director Jenny Parkes said in-housing is not new, but client expectations are changing.
Clients are placing greater value on specialisation, consultancy and strategic advice, while transparency has become a major focus across the industry.
Parkes said agencies also need to balance global systems with local market needs.
“The opportunity is figuring out how to fit within that infrastructure while still bringing local suppliers into the mix and ensuring it’s relevant to consumers in this market,” she said.
For Perion senior sales director Henry Hellegas, AI is changing workflows but not reducing the amount of work agencies are expected to deliver.
“We’re doing more in the same amount of time. It’s not like we’re sitting around after finishing tasks faster and wondering what to do with our time,” Hellegas said.
Hellegas highlighted how agencies that invest time in understanding platforms, publishers and technology partners create an advantage over competitors relying on standard approaches.
Blis media group head of Queensland and Western Australia Scott Mathison argued the growing dominance of platforms presents an opportunity rather than a threat.
While platforms own the technology and data, agencies still play a critical role in helping clients understand what the information means and what actions should follow.
“It’s an opportunity for agencies to take a step back and remember we’re in the people business,” he said.
Mathison said agencies are best placed to turn data into strategy and provide the human interaction clients continue to value.
Meanwhile, Parkes said the same demand is driving the rise of independent agencies, with clients increasingly seeking direct access to experienced leaders.
“They don’t want a senior strategy session once a month or once a quarter anymore. They want that senior interaction on a daily basis,” he said.
The panel closed on a warning that technology alone will not secure agencies’ futures.
Mathison said the risk is agencies become hidden behind platforms and automation.
“The threat is that we stop communicating and sit behind platforms until we become invisible.”
As AI, platform concentration and new investment reshape the market, the panel’s view was that agencies will need more than efficiency gains to remain valuable.
Specialisation, strategic expertise and strong client relationships are becoming the assets investors, clients and agency leaders are placing the greatest value on.
AdNews would like to thank our sponsors: Audience360, Blis, Perion, Ryvalmedia , Teads and Friend of AdNews IMAA and MAFA.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.