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Exclusive: Ad-agency megamerger

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Illustration: Brendan Lynch/Axios

A group of creative advertising agencies are coming together to form a new company called Residence, CEO Jeff Ellermeyer exclusively tells Axios.

Why it matters: This is the latest in a flurry of M&A activity in the agency space as smaller-sized companies seek to scale amid changing client priorities and to combat the ever-increasing bulk of the ad world's "Big Six."

Details: Residence will be led by the executive team behind creative studio Buck, in addition to Ellermeyer. The merger consists of Buck, Giant Ant and the HudsonBec Group, which comprise seven companies. Here's the full list of Residence's companies:

  • Anyways Creative, a London-based agency whose clients include Google, Nike, Adobe and Sonos.
  • Buck, an L.A.-based agency whose clients include Airbnb, Vivo and Nike.
  • Creative Lives in Progress, a U.K.-based career platform for advertising creatives that caters to underrepresented groups.
  • Giant Ant, a Vancouver-based animation studio whose clients include Google, Cartoon Network, Airbnb and Warner Bros. They did some of the animation for Hulu's "Animaniacs" reboot.
  • If You Could Jobs, a U.K.-based jobs platform for creatives.
  • It's Nice That, an online platform for creators and designers to talk about their work that reaches 2 million people a month.
  • VTProDesign, a Los Angeles-based interactive studio that works with Netflix, Google, Ray-Ban and Heineken. Buck acquired VTProDesign in June.

Between the lines: Ellermeyer likens the structure of Residence to a co-op.

  • "We're merging companies in and giving them some equity in the collective network," he says. "So there's some cash off the table, but this isn't the place to sell your company and walk away."
  • Some will be integrated more into Buck, while others will operate independently.
  • The combined employee headcount for Residence tops 735, with 600 coming from Buck. Collectively, the group generated $170 million in adjusted revenue for 2022.
  • This puts Residence at the smaller end of the holding company level.

The big picture: The advertising downturn and constantly changing consumer habits make fighting for client work more complex than ever. Many clients are looking to agencies that can offer multiple ways of marketing to their consumers.

  • Ellermeyer wants Residence to grow bigger, but says they'll do it a respectable clip.
  • "We consider talent at the level that we operate at to be a finite resource," he said. "We would merge in lots of companies if we were aligned and they were operating at a very high level."
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