The tectonic plates of the advertising world are shifting, signaling a dramatic reset in the industry’s global hierarchy. Omnicom and its chief John Wren’s long-standing ambition to establish an American global advertising powerhouse could soon come to fruition, with the holding company set to acquire its rival, Interpublic Group (IPG). The blockbuster deal values the combined entity at approximately $30 billion, with $65 billion in global media billings.
Read more: Omnicom-IPG Deal: Will it reshape the ad order in India?
In a joint statement, the companies described the move as a “tremendous strategic opportunity” for stakeholders, underscoring their commitment to enhancing platform capabilities and talent as part of a far-reaching network expansion. The merger promises to create a “uniquely comprehensive portfolio of services,” positioning the new entity as a powerful “marketing and sales partner” in a rapidly changing world. With the industry evolving at breakneck speed, the newly formed company aims to leverage its scale and resources to meet the demands of a dynamic market.
The announcement comes more than a decade after Omnicom attempted, but ultimately failed, to merge with the French Publicis Groupe in a $35 billion deal that collapsed in 2014 due to disagreements over terms.
Read more: Omnicom set to announce IPG acquisition
Read more: Omnicom to take over Interpublic Group; John Wren to continue as CEO and chairman
Omnicom’s takeover of IPG will likely be complete by 2025’s second half and potentially trigger a series of mini-mergers among its global network of agency brands. The combined company will retain the Omnicom name, with Omnicom Group’s long-serving CEO John Wren at the helm. Philippe Krakowsky, current IPG CEO who assumed the role in 2021 will be Co-President and COO of Omnicom, sharing the dual title with Daryl Simm. Krakowsky will also be Co-Chair of the Integration Committee post-merger.
The deal, if it goes ahead after regulatory approvals, will give Omnicom shareholders 60.6% ownership of the combined company and Interpublic shareholders will own 39.4%, on a fully diluted basis.
Publicis Groupe, currently the industry leader with a market capitalization of $27 billion, may soon face a challenge to its dominant position, paving the way for further consolidation in the advertising world. As Omnicom and IPG join forces, temptations and opportunities for strategic mergers are likely to arise, and all eyes are on WPP Group, once the reigning titan of the advertising sector before being dethroned by Publicis. Today, WPP — proudly declaring itself as “the creative transformation company” — boasts a market cap of just $12 billion, slightly smaller than IPG, which is part of the recent Omnicom deal.
Meanwhile, Tokyo-based Dentsu continues its years-long transformation, striving to catch up with global competitors after lagging behind in the early stages. On the other side of the Atlantic, the French agency Havas is gaining momentum globally, propelled by a series of acquisitions and new ventures aimed at strengthening its creative and commerce capabilities. The shifting dynamics of these advertising giants suggest an industry poised for further upheaval, with consolidation and strategic repositioning on the horizon.
In his analysis of the Omnicom-IPG deal, journalist and ad industry expert Stephen Lepitak writes that there have long been rumors that Publicis, and even Havas, have explored potential partnerships with IPG over the years. Should the proposed merger falter due to antitrust concerns, industry insiders suggest that Omnicom may pivot to target IPG Mediabrands in a standalone deal. The prevailing sentiment is that IPG is underperforming, leaving room for others to extract more value from its assets.
Meanwhile, Lepitak points out, as Accenture Song continues to expand its presence in the advertising space, attracting top talent and bolstering its offerings, the competition between traditional holding companies and consulting giants is poised to intensify further.
What Omnicom’s packing
The advertising landscape is undergoing significant disruption, with pressure on business exacerbated by big tech’s dominance in the ad market, hyper fragmentation and clients who are turning to in-housing, AI-powered tools and digital platforms for cost-effective solutions. Traditional models are decaying fast. The gameplan with the merger is not just scale but transformation. It’s more about cost synergies than revenue growth, as industry experts put it.
Reflecting holdcos’ focus on building complementary data and technology platforms and powerful ad tech systems, both Omnicom and IPG have made significant investments in proprietary platforms as Omni and Acxiom for targeting, analytics, media planning and delivery.
In its investor presentation, the companies said the integration of Omni, Interact, Acxiom and Flywheel will effectively position Omnicom for an AI -driven future. “Omnicom will have an industry – leading identity solutions platform with the most comprehensive understanding of consumer behaviors and transactions, allowing us to deliver superior outcomes for our clients at scale and speed.”
Omnicom’s portfolio includes three global advertising agency networks – BBDO, DDB and TBWA – as well as a global media network, Omnicom Media Group, which is composed of three providers of media services: OMD, PHD and Hearts & Science. Omnicom also manages a global diversified group of agencies under the DAS Group of Companies, which is comprised of: the Health Group, the Precision Marketing Group, the Commerce Group and the Advertising Collective.
In 2021, it created the Communications Consultancy Network (CCN) comprised of Omnicom Public Relations Group – with agencies including FleishmanHillard, Ketchum, Marina Maher Communications, Porter Novelli and more.
As the advertising and media landscape’s tech-driven metamorphosis accelerates, holding companies are increasingly focusing on retail, commerce media, and automation. Meanwhile, the escalation of generative artificial intelligence use continues to drive down the value of traditional creative development. This shift has left conventional creative agencies grappling with what can only be described as a crisis.
Industry heavyweight Omnicom has made waves in performance marketing with its roughly $900 million acquisition of Flywheel, a digital commerce business, in January 2024. The acquisition, which Omnicom has described as a key investment, is already paying dividends, positioning the company at the forefront of the rapidly expanding commerce and retail media sectors.
John Wren believes that the Flywheel deal has solidified the company’s market position, a move that has proven essential in securing new media accounts and bolstering its defenses against competitors. This strategy is paying off in a major way: Omnicom’s media planning and buying arm, OMG, recently emerged victorious in securing a portion of Amazon’s global media business, beating IPG’s Initiative, the incumbent. Additionally, OMG added to its roster with a significant win from Unilever, following a series of intense pitch competitions.
Read more: WPP and Omnicom bag Amazon’s media account after marathon global review
Where IPG stands
IPG global brands include Acxiom, Craft, FCB, FutureBrand, Golin, Initiative, IPG Health, IPG Mediabrands, Jack Morton, KINESSO, MAGNA, McCann, Mediahub, Momentum, MRM, MullenLowe Global, Octagon, R/GA, UM, Weber Shandwick and more. IPG is an S&P 500 company with total revenue of $10.89 billion in 2023.
IPG has made significant strategic shifts. The company sold its digital agency Huge to private equity firm AEA Investors and, in nearly the same breath, acquired Intelligence Node, an eCommerce intelligence platform designed to bolster IPG’s commerce capabilities. The company’s broader strategy also includes ramping up investing in “principal buying,” a practice gaining traction in which agencies negotiate bulk media deals with sellers and then resell the media to clients at a markup. Michael Krakowsky, IPG’s CEO, has indicated that the company plans to expand its focus on principal-based media buying in response to the rapidly evolving media landscape.
The Omnicom-IPG deal announcement also comes a few months after speculations of IPG off-loading key agency brands hit adland. In June this year, IPG denied a buyer who made an offer to buy global agency network MullenLowe. The company was also considering the sale of its digital marketing arm, R/GA, to Tata Consultancy Services (TCS), though reports suggested that negotiations faltered over disagreements on valuation. With R/GA valued at approximately $300 million, the potential deal marked another turning point in IPG’s ongoing efforts to adapt to the changing advertising ecosystem.
Why it matters
The merger of Omnicom and IPG is poised to deliver significant financial efficiencies, with an estimated $750 million in annual cost synergies and $3 billion in cash flow that would allow the company to continue to be “acquisitive”.
As of the end of 2023, Omnicom employed 75,900 people globally, while IPG’s workforce stood at 57,400. Together, the holdcos employ 133,300 individuals worldwide.
In a joint announcement on December 9, the companies outlined their vision for the newly formed Omnicom, which is positioned as “the premier marketing and sales company.” The merged entity will boast a team of over “100,000 expert practitioners” across the globe, offering an extensive array of services spanning media, precision marketing, CRM, data, digital commerce, advertising, healthcare, public relations, and branding.
However, this consolidation raises an important question: What will happen to the remaining 33,300 employees? As with any major merger, there are inevitable concerns about job redundancies, restructurings, and shifting roles. The fate of these employees will likely depend on how the combined company manages its operations and integrates the workforces, balancing the pursuit of efficiency with the need to retain talent across its global network.
In an analysts call to announce the merger on December 9, Omnicom chairman and CEO John Wren said, “Any employee listening to this, if you’re associated with any revenue stream at all, you’re gold, don’t worry about it.”