Only giant and small, specialized advertising agencies will survive as market conditions force medium-sized firms out of business or into the arms of competitors, predicted veteran Madison Avenue denizen Brendan Ryan. “To be in the middle is a bad place to be. This is true in every industry,” said the lanky vice chairman of FCB Worldwide, formerly Foote Cohn & Belding. “I can’t think of any industry where the middle is thriving.”

Not surprisingly, Mr. Ryan is heeding his own advice: His firm has just become bigger after joining forces this summer with one of its sister companies, called Draft. The two are owned by global holding outfit Interpublic Group, along with other agencies such as McCann Erickson, R/GA, Future-Brand, and dozens more.

An area of advertising that continues to grow is political advertising. Mr. Ryan said he sees this as troublesome to the industry as a whole.

“Political advertising in this country is a disgrace. Some of the most deceptive advertising runs during election campaigns and this gives the advertising industry a bad name,” he said. “We don’t do political advertising. Most big agencies don’t because it upsets employees and clients.”

The merged entity will employ 9,000 in 170 offices around the world and has been renamed Draft FCB Group. Its CEO and chairman will be Howard Draft. DraftFCB won a big chunk of Wal-Mart’s $570 million worth of creative and media business. Howard Draft himself landed the deal according to the trades. FCB’s offices are an über-modern space carved out of the old Gimble’s store across from Macy’s. FCB clients include KFC, Kraft, Taco Bell, Coors, S.C. Johnson, Dockers, Hewlett-Packard, and Motorola. The merged group will be “a new kind of agency”that will offer all services to clients and be prepared to face the industry’s uncertain future.

“Now everything’s changing rapidly,” Mr. Ryan said. “The biggest change is that the consumer’s in control. The days of carpet bombing consumers with 30-second TV commercials on every channel are over.”

Consumers are no longer sitting in front of television sets but are dividing their time between other press outlets, cell phones, and computer screens.

“The advertising business is the next on the list after the music and photography industries, which have declined rapidly,” Mr. Ryan said. “Five years ago, Sony owned the music business. No one would ever have believed that Apple’s iPod would grab 70% market share.”

Mr. Ryan has worked both sides of the business, beginning his career as a brand manager at General Foods, then Citibank. He became FCB’s CEO in 1996 and then its chairman after appointing a CEO successor in 2004.