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How Omnicom’s purchase of IPG changes the notion of an agency holding company


Omnicom’s proposed acquisition of IPG, announced earlier this month would make it the largest agency holding company in the world, with $25 billion in annual advertising revenue and more than 100,000 employees.

The transaction aims to generate $750 million in cost synergies, primarily by consolidating back-office functions and reducing redundancies by potentially cutting 30% of the workforce. A depressingly familiar page in the corporate playbook.

But the initial selection by IPG and Omnicom’s executive teams focused on other outcomes, such as artificial intelligence and the combination of both entities’ big bets in data-driven marketing.

Below is a compilation of the main aspects of the draft, including potential downfalls that aren’t necessarily listed on the field (see bullet points below).

Also, read below for insider observations that are likely to have clients and investors stroking their chins over the finer points involved in such a market move.

Arguments for union

  • Advantage of scale: The merger allows Omnicom to compete more effectively with Publicis Groupe and WPP, leveraging efficiencies in technology, real estate and shared services.
  • Market differentiation: The integration of platforms such as Omnicom’s Flywheel and IPG’s Acxiom offers unique capabilities, especially in retail media and AI-driven advertising, which appeals to modern marketers.
  • Financial growth: As organic growth in advertising is challenging, the merger provides opportunities to increase shareholder value through cost reductions and expanded offerings.
  • Client Focused Strategy: Omnicom’s leadership highlighted new opportunities for talent and clients, and provided a tailored solution on a global scale.

Arguments against

  • Operational complexity: The merger of two large entities could create inefficiencies and distractions that would affect client relationships and service delivery.
  • Talent loss: Cultural mismatch and perceived bureaucracy can drive talent to independent agencies.
  • Limited global reach: The US-centric nature of both companies may hinder growth in underrepresented regions such as Asia and Europe.
  • Client conflicts: The overlap may force some brands to switch agencies, disrupting the partnership.

The proposed merger represents a critical moment for consolidation in the advertising industry, although its success depends on execution and market response.

At a time when the growing popularity of artificial intelligence is challenging the traditional business model and value proposition of holding companies, IPG and Omnicom are doubling down, according to sources contacted by Digiday.

Some have been keen to point out that the importance of scale is not limited to the traditional media agency buying model; it is because the scale is now essential for training AI investment models both teams wanted to trumpet in the initial material for consolidation.

CEO of Ebiquity Ruben Schreurs told Digiday that the development highlighted that all holding companies in this space will need to respond to markets: “What are you?”

He adds: “Everyone is so invested in the concept of being an ‘agent’ that the idea of ​​being an ‘agent’ goes out the door, even though they say it can go hand in hand.”

The “platform not a holdco” vision of the CEOs of both Omnicom and IPG might resonate with some, especially with some CMOs. The promise of a stronger principle-based buying unit could appeal to marketers who have resigned themselves to agencies operating in what might generously be called transparent opacity.

The term “agent” is out of the question, although he claims that it can go hand in hand

Ruben Schreurs, Ebiquity

However, Nick Manning, a seasoned executive who has advised CMOs at both Ebiquity and MediaLink, as well as founder of Manning Gotlieb OMD, told Digiday that principle-based buying could be at the heart of his investment thesis.

“IPG has been slow to adopt this, even though their Orion unit has been doing it for a long time … I think the markets have forced them to do more, as they’ve seen Publicis and Omnicom … and they’ve improved significantly. margin,” he adds.

Although the value of principled trading will erode over time with Manning commenting that Omnicom is simply “buying a worse version of itself” if it fails to make the most of IPG’s investments in recent years.

Sources noted that the prospect of an expanded Flywheel — the retail media arm bought by Omincom for $835 million in 2023 — may spark interest among marketers investing in retail media as a cornerstone of their first-party data strategies.

While this may seem idealistic on the pitch, several practitioners told Digiday that the actual execution is likely to be much more complicated given the “mixed” results of trying to integrate Acxiom into IPG after its 2018 purchase.

CheckMyAds’ Arielle Gacia (a former IPG employee during her time as Chief Privacy Officer at UM) notes how IPG “hasn’t been able to thread the needle on justifying this [$2.3 billio] investment.”

Garcia further challenges the notion that Acxiom has a large amount of first-party data, saying it is a “third-party data broker,” a view supported by two other senior agency executives consulted by Digiday who have direct experience working with the unit IPG.

However, it is in recent filings in the lawsuit where IPG’s Acxiom and Kinesso units are docked that this element of the investment thesis probably faces the greatest stress test.

in it the claimant Adstra objects to the misuse of its data duo IPG to create competing identity products, an outcome some say could impact Acxiom’s data strategy, financials and integration into Omnicom’s ad technology stack.

But for now, it’s all just speculation. Nothing is set in stone and before us lies a sea of ​​ifs, buts and maybes. That means marketers are stuck in their all-too-familiar position: waiting for the chips to fall.

Both Omnicom and IPG management are aware of this, and the lessons of the past will linger long in the mind of the acquiring party’s executives after its earlier proposed merger with Publicis was derailed by structural complexities.

“They’re trying to change the legacy model to a non-legacy model, which is very difficult,” Manning concludes, “but they have to do it because it’s the only way they can survive.”



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