Tim Castree, the global chief executive of MEC, who is merging his agency with sister WPP shop Maxus to create a new company, told Campaign: "No-one is sitting around comfortably right now."
He warned that media agencies need a "sustained organisational effort" to change because "it is a very contested time in our industry" with many new entrants and challengers.
Castree said media agencies have got to move from media planning and buying to embrace content creation, performance marketing and e-commerce.
"We have all the capabilities," he said, but they are "smaller than they need to be", explaining how he wants the new merged MEC-Maxus business to win more clients.
Lindsay Pattison, who is moving from global chief executive of Maxus to become chief transformation officer at Group M, the operating company for WPP’s media agencies, said the merger made sense because it would give the new company over $1bn (£790m) in revenues and "give us the resources and talent" to compete as a top five global agency.
Pattison admitted driving transformation was difficult but said: "I love how hard it is."
Group M has previously said the MEC-Maxus merger is partly about making cost savings and signaled that jobs could be lost.