‘I have an order of extinction’: Mat Baxter on why the holdcos won’t be around in 5 years
Former global strategy and creative boss at IPG Mediabrands Mat Baxter believes the big agency holdcos will be dead within five years because they no longer fulfill a vital role.
Baxter made the comments on the Mumbrellacast, recorded live at SXSW Sydney (South by Southwest). Speaking with Abe Udy, Tim Burrowes and Cat McGinn, Baxter pulled apart the holdco model he said was primarily designed by WPP founder Sir Martin Sorrell, who as it happened had just delivered a SXSW Sydney keynote.
Baxter also laid out the order in which the holdcos would fold, beginning with the beleaguered global arm of Dentsu.
“The networks are facing an extremely difficult challenge,” Baxter said.
“I think it’s an extinction level event that networks are facing. I don’t think networks will exist in five years.”
The first to go would be Dentsu, outside of Japan, then WPP, Omnicom/IPG and then Publicis, in that order.
Baxter’s ordering follows organic revenue growth rates, as detailed in the Mumbrella graph below for the last quarterly reporting cycle, with the exception of Dentsu. The difference is that because Dentsu Japan has two distinct levels of performance – good for Japan and struggling for non-Japan – its overall performance appears close to average.
Q2 2025 organic growth holdco leaderboard
“Dentsu has had challenges outside of Japan for a long time,” Baxter said.
“So [new ANZ CEO] Rob [Harvey] has got a really big job on his hands.
“But he’s fighting against things bigger than Dentsu itself. He’s fighting against wider category dynamics for holdcos.
“They’ve been juicing the orange through cost cutting for a very long time – the top line has not grown really in a substantial way across all the major holdcos for many, many years. They’ve been making quarterly numbers through cost cutting. You can only do that for so long. And now we’re cutting into bone.
“You’ve got AI coming in over the top of that: they’re really monumental challenges for the holdcos to navigate.
Live on stage: (L-R) Cat McGinn, Mat Baxter, Tim Burrowes, Abe Udy
“I wouldn’t want to put it on Rob to somehow magically wave the wand there. I think it’s a bigger market discussion about the architecture of the holdcos in totality.
“It’s interesting you mentioned you’d seen Sir Martin talking about the future of the industry and the numbers of people that may or may not be laid off. The irony there is that, it was his core architecture of holding companies that has to a large extent set us up for the predicament that we are now in.”
He said the holdco model was forged in the 1990s.
“Sorrell was the finance director at Saatchis in London. It was a financial play a way of grouping your costs in a central way, creating efficiencies of scale, grouping your media investment, negotiating with leverage.
“Back then those things mattered … but that leverage in scale does not exist in the same way anymore … the leverage exists at the media end, it exists with Google and Meta and Amazon.
“What is the holdco there to do in the current market structure? And that’s a really difficult question to answer. The holdco model has not really fundamentally evolved for the last couple of decades.”
Baxter’s bone fides in the holdco world are strong: he has worked at Publicis (early in his career), WPP and IPG, the latter at the highest global levels. He has since launched a luxury tattoo skincare brand, Skingraphica. Listen to Mumbrella’s deep dive with him on his career and near-death experience that set him on a different path.
Subscribe to the Mumbrellacast on your favourite podcasting platform to listen to the full conversation, or use the player below to listen from this page.
Other topics covered by the crew this week at SXSW were Vinyl Group’s AI-fuelled plan to increase content output 10 times and hit break-even, Nine’s upfront held the day before the recording, and this week’s radio ratings book that saw 2GB gaining back ground.
In terms of Nine’s upfront, the event was covered chapter and verse by Mumbrella and our correspondents.
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I think Mat is wrong.
The trouble with these daring and absolute statements is that they tend to come back to haunt you in the future when you are proven wrong by the passage of time
holdcos that are mostly still experiencing organic growth and representing billions in revenue and profit will be extinct in 5 years.
ok.
maybe smaller and replaced by tech and ‘indies’, but, not dead and buried.