Dive Brief:

• Publicis.Sapient, an arm of ad giant Publicis Groupe, announced the consolidation of Razorfish and SapientNitro into a single entity called SapientRazorfish in a press release Thursday. Current SapientNitro CEO Alan Wexler will head the new group, while Razorfish chief executive Shannon Denton will become its chief strategy officer.
• The combination of the two firms comes “in response to client needs for digital expertise at scale.” The dual objectives of SapientRazorish are “change and speed” in a rapidly evolving digital landscape. Digital currently represents 54% of Publicis's overall revenue, per the release, and the group's goal is for that number to hit 60% by 2018. 
• While leadership changes are already in effect, the newly reconfigured Publicis.Sapient won't fully begin operations until January 2 of next year.  

Dive Insight:

Long-standing agency struggles to adapt to a digital-first world came to a head in 2016, as a variety of major brands continue to reshuffle or entirely drop agencies in favor of in-house operations: Pepsi took social media and digital marketing responsibilities away from The Barbarian Group after putting the agency under review in September; Sprint recently ditched Deutsch for Droga5, with the intention of the latter working closely with its own creative studio.

SapientRazorfish’s foundational focus on digital expertise shows Publicis trying to adjust for the trend away from agencies heading into 2017. The move also comes as part of the ad giant’s overarching “Power of One” strategy, which views consolidation as a benefit to the client in making operations simpler and more efficient. As digital disruption has made its mark on marketing, a number of specialized shops have sprung up, leading to a fragmented landscape. Now that digital is a significant portion of spend for many marketers, more moves like Publicis's could be coming. 

A client-first approach is becoming increasingly essential for agencies, who've come under fire not only for a failure to account for an ever-more fragmented digital landscape but also for a variety of transparency issues that were uncovered at the behest of the Association of National Advertisers (ANA) over the summer. While some marketers are pivoting away from agencies entirely, others are urging for fence-mending to preserve the health of the industry as a whole.

In October, Proctor & Gamble's Chief Brand Officer Marc Pritchard insisted that the "negative narrative" and pressure surrounding agencies need to stop if brands hope to forge a path toward better digital content in the future.