Marketing and advertising firms are focused on deal making, AI solutions and potential economic challenges.
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Marketing and advertising firms are focused on deal making, AI solutions and potential economic challenges.
Environmental and facility services companies are investing in operational efficiencies and sustainability initiatives.
Workforce solution companies are laying the groundwork for innovative solutions and new opportunities.
Marketing and advertising firms, environmental and facility service companies, and workforce solutions companies are concentrating their efforts on strategic growth initiatives. They are also emphasizing technological advancements to foster long-term viability and efficiency.
Three key themes have emerged for marketing and advertising firms, according to Bloomberg Intelligence:
Each of these themes will directly affect the value of marketing and advertising firms, which have underperformed the MSCI World Index for multiple consecutive quarters. The index measures the performance of large- and mid-cap companies across developed markets worldwide.
The industry is poised to undergo a seismic shift in 2025 if the pending merger of two of the largest firms in the space is finalized, as this would create the largest holding company by revenue in the industry. Such a merger would force disruption in the sector.
Companies are fighting to differentiate themselves in a sector where organic sales growth has converged with the sluggish pace of real gross domestic product. As ad spending normalizes after a year that featured both the Olympics and a presidential campaign, economic uncertainty and potential tariff wars may cause clients to pull back.
Some firms still feel the best way to remain competitive is through a large acquisition or merger. Several larger firms have acquired smaller niche firms that have specific capabilities in areas in which they want to expand.
Agencies are also adapting their business models through acquisitions to boost their marketing-technology capabilities and business-transformation offerings. Competitors in the space must reassess their strategies to scale technology capabilities and drive efficiency in an artificial intelligence-led future.
Generative AI poses a conundrum for the big ad agencies because it can offer significant advantages but requires substantial investment. Automation of certain in-house functions may increase efficiency and provide value to clients, but it’s likely to prompt business model reengineering and head count rightsizing.
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Some firms will rely on third parties to develop automation processes that provide a value proposition to clients. Partnerships with technology firms or niche companies can be successful if deployed properly.
A possible trade war will likely compound uncertainty if the U.S. administration moves ahead with plans to hike tariffs. According to GroupM, global ad spending is projected to grow 7.7% in 2025, compared to 9.5% in 2024. This normalization in spending highlights the need for agencies to work harder for top-line gains, particularly without the benefit of significant events such as the Olympics or a presidential campaign.
Agencies are increasingly focusing on performance advertising and shifting budgets toward sales activation rather than brand building. The industry's historical single-digit expansion is expected to continue, with organic sales poised to grow 2% in 2025, according to Bloomberg.
Environmental and facility services companies are tackling strategy by investing in two key areas: operational efficiencies and sustainability initiatives.
Firms are focusing on implementing AI tools that enable predictive maintenance and optimization of energy consumption. The sector is also at the forefront of implementing Internet of Things devices that allow facilities to engage in real-time monitoring and data collection. These measures enhance decision making and enable the reallocation of resources within facilities to maximize labor efficiency.
Some companies within this sector are focusing more on sustainability initiatives, including renewable energy or recycling projects designed to increase energy efficiency. Embracing circular economy principles involves minimizing waste and promoting the reuse and recycling of resources, which is becoming increasingly important in facility management.
As the sector shifts its focus, it will need workers skilled in predictive analytics and other areas that leverage AI.
Labor is crucial for business services companies, and while technology continues to be disruptive, such as the potential for AI to replace the workforce, the real opportunity is how technology can enable the workforce if the right strategy is put into place.
Workforce solutions companies are in a prime position to embrace technology. As labor costs continue to increase, and the demand for labor with specific skill sets also increases, companies may be more inclined than ever to hire outside firms to produce workers for them, whether that’s through staffing firms or by outsourcing human capital management activities.
But this scenario hasn’t come to fruition yet. As shown below, temporary help has continued to decline when compared to the same time last year.
This hasn’t stopped workforce solutions companies from laying the groundwork to take advantage when the time comes. These companies are making significant investments in their go-to-market capabilities, research and development, and strategic partnerships to maintain a competitive edge.
This sector hasn’t seen improved financial results despite the fact that they’ve been at the forefront of many strategic investments to enhance efficiency. While there is a less optimistic outlook for these firms compared to some other sectors, particularly given the decreased demand for temporary help, this sector has put in the effort to benefit down the road.
Workforce solutions companies are also striving to create strong AI policies to avoid unforeseen bias. Measures include the use of diverse training data, bias testing, human oversight and a constant feedback mechanism to flag any bias or unfairness.
Strategies in the space continue to focus on operational efficiencies. AI integration across recruitment workflows has been a key focus. Some staffing software firms have embedded AI throughout the recruitment process to boost productivity and efficiency, enabling recruiters to focus on strategic tasks and enhancing overall performance. AI-driven candidate-matching tools identify top candidates by analyzing resumes and job descriptions, streamlining the selection process and improving the quality of hires. Additionally, AI-powered chatbots and communication tools facilitate prompt and personalized interactions with candidates, improving their experience and increasing engagement throughout the recruitment journey.
The year 2025 will be a period of transformation and adaptation for the business services industry. Companies’ ability to identify and execute on their strategy, which may include adopting AI solutions and implementing operational efficiencies, will determine their success. Without an effective strategy, they will fall behind their competitors, lag behind industry leaders and lose market share quickly.