Traditional advertising agencies are fighting an uphill battle against Google and Facebook. Publicis Groupe and Omnicom Group, two of the largest ad agencies in the world, recently announced that they will merge in a move that analysts view as an attempt to even the playing field.

Wikibon Principal Research Contributor Jeff Kelly outlined the trends that are reshaping the ad industry in recent piece entitled “Advertising Agencies Must Adapt to Big Data or Die Trying.” The way Jeff sees it, the likes of Publicis and Omnicom have no other choice than to scale operations and abandon the traditional one-to-many model.

“In order to compete with the giant web properties, advertising agencies need to improve their Big Data capabilities, and fast,” Jeff writes. “While ad agencies don’t have the advantage of operating the most widely used search engine or social network on the planet (and the treasure trove of user data they create), they can and must do a better job of creating data-driven ad campaigns that take into account the specific online & mobile behaviors and preferences of their clients’ intended audience.”

Jeff believes that ad agencies must undergo several transitions in order stay relevant in the Big Data era. Their first priority should be developing close ties with web-scale companies such as Google, which can effectively segment users but lack the expertise needed to optimize content for each demographic.

Ad agencies will also need to embrace the analytics technology required to process, store, analyze and visualize large volumes of data from multiple sources in multiple formats. To that end, they will have to hire business analysts and data scientists who can transform raw data into actionable insights.