Omnicom picks up IPG: Agency superpower in the making?

Omnicom buying Interpublic Group (IPG) not only creates the world’s biggest agency holding network—their combined revenue was $25.6 billion in 2023—it knocks incumbent WPP off its perch ($18.89 billion). It rattles Publicis after it recently made rap royalty Snoop Dogg declare it the world’s biggest agency holding company. More importantly, it makes consolidation the word of the year for the advertising world.

The merged entity will retain the Omnicom name and bring together over 100,000 ad folk and agency brands such as McCann, FCB, MullenLowe Lintas, DDB, and BBDO under one roof. Such an attempt was made before in 2013 when Omnicom and Publicis tried to come together, but it did not go through. 

And as this move changes the rankings of agency holding companies, Omnicom and its new capabilities will look to discontinue the continued rise of paper-thin margins—ad agencies lose money because of their pricing model, to Metas and Googles and Amazons of the world, to in-house agencies, and yes, who can forget the creators?  

WPP and Publicis leadership would have mulled over the acquisition and strategised on how to keep their power, rather than give space to the new kid on the block. One possibility? An acquisition spree of independent agencies to bolster their hold. 

In India, Omnicom will become parent to agencies such as FCB, MullenLowe Lintas Group, DDB, McCann Worldgroup BBDO, Omnicom Media Group, IPG Mediabrands, and TBWA. They service a litany of clients like McDonald’s, Domino’s, P&G’s Ariel, Tata Motors, Apple, Nivea, and Air India. 

We asked some of Indian ad land's old guard and new champions about what this acquisition means for the agency ecosystem and the independent agencies, of course.  

Edited Excerpts (As per alphabetical order of first name)

Aalap Desai, co-founder and chief creative officer, TGTHR

This is big because the big players are merging to become even bigger. I think it's a survival tactic because scale has become a challenge for networks in the last few years, and it's better to do it together. Safer and stabler. 

The biggest advantage independents have today is the attention and the quality they deliver to clients who need it. Merging and becoming bigger doesn't answer that challenge.

There's an undeniable industrial logic to two large groups joining forces, and there’s a nice dramatic side plot to strategically sideline WPP and transform the advertising landscape into a two-way competition with Publicis. - Gautam Reghunath, co-founder and CEO, Talented

Akshay Gurnani, co-founder and CEO, Schbang

The acquisition will put a lot of pressure on the other holding networks compared to independent agencies because, as independents, it was always difficult to compete with them. While we're trying to optimise, increase our spending, and better our relationship with different kinds of media partners and our volumes, it will not be at the level of these holding companies; it is a reality independent agencies have to accept.

What is going to happen is it will make us a lot sharper on how we've got to deal with clients and client pitches. 

The merged entity will command a much larger share of the overall ad spends in the country and a much better pricing from publishers, vendors, and platforms; it becomes difficult to compete as independents.

But I think mergers and consolidations are always good in our industry because they bring the best of both worlds together, and they give independent agencies a lot of hope; a lot of eyeballs will also come to the independents as specialists in tech or creative or some bit of media, or within the eyeballs of the larger groups when it comes to mergers or acquisitions.

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Ashish Bhasin, founder, The Bhasin Consulting Group

It is the era of consolidation, be it in media or advertising. We will see more consolidation taking place. The agency side is reasonably consolidated already with the top five networks controlling nearly 80% market share in most markets.

Agencies are under pressure to add value to their clients and get a fair price for their services. So, a consolidated structure will put them in a better negotiating position and help them invest more in areas like technology, AI, data analytics, and so on. There is a good chance that weaker agency groups may get acquired over a period of time by the larger ones. 

Eventually, I think the top three players (the orders keep changing) are going to be Omnicom, Publicis, and WPP. These three seem to be separating themselves into a different league amongst the holding companies.

A bigger and better-resourced group will be able to invest in better technology and better talent. The most important thing to be remembered is the people factor because how you manage to bring people together will determine the success or failure of the acquisition.

Gautam Reghunath, co-founder and CEO, Talented

From the nosebleed seats of industry speculation and with zero insider access, this seems like another move in a high-stakes survival game from my (extremely) outsider perspective.

It’ll strategically help patch gaps in each company's business model, reflecting an industry where genuine growth is becoming increasingly scarce, making consolidation the default survival strategy.

There's an undeniable industrial logic to two large groups joining forces, and there’s a nice dramatic side plot to strategically sideline WPP and transform the advertising landscape into a two-way competition with Publicis. 

And while this might mean WPP is stripped of its top-dog status, there's a compelling argument that they remain the most seamlessly integrated of the major holding companies, especially in India. As for indies, we’ll just watch from the sidelines, popcorn in hand.

Rajiv Dubey, VP, marketing, Dabur India

It is unlikely that a consolidation will impact media buying negotiations. Typically, when a company buys media, it does so based on the strength of its own marketing spends.

How much money one can invest determines the rates one will get from a media company. A media agency helps stabilise rates if there is fluctuation in the market because of the total volume of media spends it handles.

An acquisition always expands the capabilities of an organisation. Not every agency is proficient at everything; an acquisition of this nature could bring together a variety of capabilities under one roof.

Knowledge sharing will help agencies cover any gaps in their toolkit for brands and turn the entire network into a more wholesome solution and service provider.

A realignment in agency-client relationships may not happen immediately and will take time. But what it can help with is getting brands to consider new solutions from the newly merged entities.

An agency could showcase the new services to its existing clients and see if the brand would like to sign up for these additional solutions. These are two benefits that can be expected from an acquisition of this nature.

On the digital front, given that the share of digital advertising is growing and there are behemoths like Google, Meta, and Amazon to tackle, the combined power of the two agencies will help. They will possibly be able to lay down their own terms with these large technology companies.

Dr Sandeep Goyal, chairman, Rediffusion

Acquisitions are both good and bad. The holding companies hopefully end up with stronger balance sheets. But in the process, some brands get ‘rationalised’, ‘right-sized,’ or even eliminated. Which is sad—JWT and Y&R have vanished. So don’t be surprised if the Omnicom's acquisition of Interpublic too means the death of some venerable old advertising brands.