“Speed is a strategy”: JP Morgan on how agencies must compete in 2026

New Delhi: Agency dealmaking is expected to rebound in 2026, but it will be narrower and more capability-led. Platforms are automating large parts of advertising execution, pushing agencies to prove where their value will come from over the next three to five years, wrote J.P. Morgan in a blog analysing the advertising sector.

J.P. Morgan said traditional agency M&A slowed in the second half of 2025 as leaders assessed the implications of the Omnicom-IPG merger announced in November 2025, which it described as creating a combined entity generating $25 billion in annual revenue with over 100,000 employees globally.

“We saw a bit of a slowdown in traditional agency M&A,” said Craig Rosoff, Head of Mid-Cap Media & Communications, Investment Banking. “CEOs were taking a wait-and-see approach.”

J.P. Morgan expects deal activity to return in 2026, but with buyers prioritising specific capabilities over broad consolidation. The areas seeing the most attention include connected TV advertising capabilities, retail media management tools, and influencer and sports marketing. Digital out-of-home and PR acquisitions, it said, are continuing at a steady pace.

When agencies do pursue acquisitions, J.P. Morgan said the rationale typically falls into three buckets: geographic expansion to support new client wins, service diversification to fill capability gaps, or acquiring client relationships and talent to deepen the roster.

“You can’t win certain Agency of Record contracts without being in Asia and Europe,” said Eli Acosta, Managing Director in the Media, Communications & Digital Infrastructure group at J.P. Morgan Commercial Banking. “It’s about the capability piece, giving clients what they're looking for.”

The Omnicom-IPG deal also created openings for midsize agencies, J.P. Morgan said, as divestments and talent movement unlock assets and teams that can strengthen independents.

“A merger of this magnitude presents our midsize clients with an opportunity to pursue certain assets that may be sold or spun off, and hire talented people to bolster their existing business,” Acosta said.

J.P. Morgan’s core argument is that platform competition is now structural. It cited Dentsu projections that digital advertising will account for about 69 per cent of global ad spend in 2026 and grow 6.7 per cent. The bank said Amazon, Google and Meta have automated targeting, creative optimisation and performance reporting to a point where advertisers with straightforward direct-response needs can often bypass agencies.

That shift, it said, aligns with what CMOs increasingly want: daily uplift metrics, programmatic automation and dashboard-visible results. It said self-serve platform tools deliver these efficiently for single-channel campaigns.

For agencies, JP Morgan said this sharpens a build-versus-buy decision. The choice is to invest in proprietary capabilities that prove value beyond what platforms offer, or risk losing enterprise clients to competitors with stronger tech infrastructure.

“These automated tools are geared toward smaller advertisers who just need a single-platform ad campaign,” Acosta said. “However, larger advertisers who are running omnichannel campaigns on a global basis need agencies that can handle this level of complexity.”

Rosoff said the unknown impact of AI has shifted from being a reason to delay deals to becoming a catalyst for them.

“The biggest hurdle to overcome in recent investment or acquisition decisions has been the unknown impact of AI,” Rosoff said. “Many companies have made a tremendous amount of progress over the last 18 months in understanding the data they own and defining what AI can do for them. As AI starts to shift from an unknown to a tailwind, valuation will improve, and more deals will get done.”

J.P. Morgan said valuation momentum is strongest for specialised firms with recurring revenue and tech-first or tech-enabled models, where proprietary data assets and integrated workflows can be linked to improved client outcomes.

“Specialized firms with strong recurring revenue models and tech-first or truly tech-enabled platforms continue to be a significant focus for acquirers,” Rosoff said.

It added that buyers are not paying premiums for agencies that merely claim to use AI. The premium, J.P. Morgan said, is for proprietary data assets and workflow integration that demonstrably improves results, and for businesses moving from project-based billing toward performance-linked economics.

“Advertising companies that have invested in technology for internal purposes and acquired companies with tech and data capabilities will propel those companies toward a performance-based versus project-based business model,” Acosta said.

Tracy-Ann Lim, Global Chief Media Officer at JPMorganChase, said generative AI is already helping with productivity tasks, but that the largest gains will depend on foundational work, including data readiness and identity infrastructure.

“Generative AI is already helping us work smarter, speeding up writing, ideation and visualizing concepts, but we haven’t yet seen the exponential gains that many have promised,” Lim said. “The real value will come when we have well-organized marketing data, robust identity foundations and enterprise-grade models that can deliver precise, explainable results.”

Lim said the shift will change where agencies sit in the value chain. “By 2030, agencies will sit closer to clients as strategic advisors, not vendors,” she said. “As execution becomes automated, value shifts to insight, knowing when to act, why it matters and what happens next.”

She also flagged how AI-driven search is changing discovery, increasing the need for strategy that goes beyond keyword buying.

“As people shift the way they find and gather information, AI-driven search is reshaping how brands show up and connect with audiences,” Lim said. “It’s not just about keywords anymore; it’s about understanding intent, context and delivering relevant experiences in real time.”

For brands, Lim said the optimal model is not choosing between platforms and agencies, but deciding where platform tools add efficiency and where agency expertise adds value.

“The best outcomes happen when agencies work side by side with a client to solve problems and seize new opportunities,” Lim said.

J.P. Morgan said acquisitions are increasingly clustering around capabilities where demand is running ahead of delivery, including AI and data infrastructure, connected TV advertising experience, retail media management capabilities and identity frameworks.

It said the path to scale is also diversifying. Private equity continues to build agency platforms through tuck-in acquisitions, while some firms are using partnerships and joint ventures to access capabilities and scale without full acquisitions.

Rosoff summed up the pace imperative for agency leadership. “Move fast, make mistakes, make changes and keep going—speed is a strategy in this environment.”

For India’s agency ecosystem, the takeaway is that as platforms automate execution and brands push for measurable outcomes, agencies that can show proprietary tech, recurring revenue models and demonstrable impact are likely to command premium valuations, while keeping strategic counsel and creative differentiation at the centre.