A major merger is officially happening, finally putting to rest the decades-long rumors about a potential tie-up between American ad giants Omnicom and IPG. This move is set to shake up the advertising industry in a big way.
The two companies will operate under the Omnicom brand, which posted $25.6 billion in revenue in 2023. With over 100,000 employees, the newly merged company will be led by Omnicom’s current CEO, John Wren, while Philippe Krakowsky and Daryl Simm will serve as co-presidents and COOs. Krakowsky will also co-chair the Integration Committee.
This merger brings together some of the biggest names in advertising, like TBWA, DDB, Weber Shandwick, McCann, BBDO, OMD, and IPG Mediabrands. With an expected $750 million in annual cost synergies, this deal could spark even more consolidation in the industry.
While competitors like Publicis and Havas have toyed with the idea of acquiring IPG over the years, if regulatory concerns block this merger, insiders think Omnicom may pursue IPG Mediabrands separately, seeing value in its underperforming assets.
As Accenture Song continues to grow its presence in advertising, the battle between traditional holding companies and consultancies is about to get even more heated.
Here’s why this merger is happening now:
- IPG’s Struggles: IPG has lost some big creative accounts recently (General Motors, Amazon, Verizon), and with the end of the financial year approaching, the merger could help prevent a hit to share prices. While IPG is already selling off some assets, a full sale could bring in more cash.
- AI and Automation: With AI transforming the creative space, combining Omnicom and IPG Mediabrands makes sense. The merged company will dominate US media, offering strong data capabilities through Omnicom’s Flywheel and IPG’s Axiom platform—an attractive package for advertisers.
- Scale Over Savings: The real benefit of this merger is scale. The combined Omnicom/IPG entity will offer advertisers top-tier talent and services under one roof, making it a major contender for large advertising contracts.
- Operational Fit: Merging two US-based companies makes this easier than trying to combine with foreign firms like WPP (UK) or Dentsu (Japan). While the companies have different leadership styles, they’re a solid operational match.
- John Wren’s Legacy: Omnicom’s CEO John Wren has long wanted to lead the largest ad network, especially after a failed 2014 merger with Publicis. Achieving that goal before retiring would be a major feather in his cap.
Industry expert Ian Whittaker of Liberty Sky Consultants shared his thoughts:
- IPG’s Struggles: With IPG’s recent performance, its sale isn’t shocking, though WPP probably won’t be involved.
- Cost Synergies: The deal’s primary benefit will come from cost savings, but IPG’s Acxiom unit could boost Omnicom’s Flywheel platform.
- More Consolidation: This merger could trigger more consolidation in the industry, especially among mid-sized agencies like Dentsu and Havas.
- Succession Plans: With Wren’s long tenure, there’s buzz about who will take over after the merger.
- Regulatory Scrutiny: The deal might face a tough regulatory review, especially with the current political climate and the Biden administration’s approach to advertising.
This merger signals a seismic shift in the advertising world, with massive implications for competition and the future of agency networks.
The convergence of tech and brands 