Can Omnicom-IPG navigate the challenges that doomed the Publicis deal?

New Delhi: Just as the industry was winding down after the Viacom18-Disney Star merger and gearing up for a quiet December, Omnicom dropped a bombshell by announcing its acquisition of Interpublic Group.

In a plot twist no one expected, Omnicom's John Wren and IPG’s Philippe Krakowsky have been quietly scheming behind the scenes, holding hush-hush talks for most of the year and keeping it all under wraps.

If the deal glides past regulatory and shareholder hurdles by late 2025, it will yield a $30 billion revenue juggernaut—a true megalodon in the advertising world.

But the waters are far from calm. For Wren and Krakowsky, the immediate challenge is to keep clients steady, and employees confident, steering clear of turbulence until the merger is sealed. After all, this isn’t Omnicom’s first attempt at a game-changing acquisition.

Flashback to 2013-14: When Omnicom and Publicis tried to merge, Chinese regulators hit pause, worried the mega-deal would squash competition in their advertising market, especially in media buying and digital ads. The delay dragged on for months, creating tension and uncertainty, and eventually, the merger fizzled out in 2014, thanks in part to those regulatory roadblocks.

This time, similar challenges loom large—balancing client categories, managing agency overlap, and navigating the tricky business of deciding who gets the corner offices.

Hinting at both Wren and Krakowsky are ready to do anything for this deal to happen, Wren told analysts during the call, “If required, we are prepared to act on parts of our portfolio, but we’re not anticipating that at this point.”

The stakes are high, and the industry is watching—will Omnicom get it right this time?

During Monday's conference call announcing the deal, Omnicom CEO Wren emphasised that lessons from the failed Publicis-Omnicom merger have been carefully considered to ensure they won’t be repeated this time. 

He said, “Earlier, a lot of cultural and unspoken things got in the way. Philippe and I have been talking about this for a while, and given my past experience, I knew this was something I would only attempt twice in my career—both times by me! It required a lot of time and care, and Philippe approached it with the same meticulousness, ensuring that the lessons learned a decade ago would not be repeated.”

“10 years ago and about eight or nine months into the Omnicom-Publicis merger process, China was holding up the Publicis-Omnicom merger. I recall being asked by an analyst on a first-quarter call—I can't remember the exact year—about Omnicom’s Plan B, and at that time, I said there wasn’t one. In this case, however, we do have Plan B and Plan C. We have prepared for those contingencies and are ready to take whatever steps are necessary to meet regulatory requirements.”

Concerns regarding clients

Since news of the IPG-Omnicom merger started making waves, industry chatter has been abuzz with concerns that the move might cause turbulence for the companies in the short term, giving other advertising giants—and even nimble independent agencies—a chance to swoop in and claim their clients.

But Wren was quick to silence the sceptics, brushing off the idea as nothing more than client shortsightedness if they chose to jump ship.

Wren added, “Putting their business into review is quite complex. Once you get past the emotion and the bluster of what’s said on any given day and people sit down to examine who the best providers of services are in the industry, I think it would be hard to conclude otherwise. The combination of Publicis assets with Omnicom’s assets, our talented people, our track record, and our obsession with looking toward the future rather than the past makes it shortsighted for a major client to switch vendors or discard either of us. We just need to wait for regulatory approval to move forward.”

Both companies have clients in sectors like automotive, technology, and consumer goods, and combining their portfolios could lead to a situation where they are representing rival brands.

However, according to Wren, clients have become more sophisticated. “These issues can be solved through various means and different solutions. We have to sit down with the clients in the coming weeks and months and assure them that we still value them just as much as we did before this morning. Clients are what drive us every morning when we wake up. So, I'm not expecting anything.”

IPG CEO Krakowsky added that this might have been an issue 10 years ago, but not now. 

He said, “The nature of what we do for clients is much broader and more core to their business. When you think about what Flywheel does or what Acxiom allows us to do, and how closely we work with client data, particularly on the commerce side of things, the nature of the partnerships has evolved.”

Fear of job cuts

Another aspect of this doing the rounds in the advertising world grapevine is the job cuts. 

The acquisition is expected to lead to job cuts, as overlapping or redundant agencies within the network may be streamlined or dissolved.

During the conference call, Wren reassured that with the resources, capabilities, and cash flow resulting from the merger of Omnicom and IPG, the move will create better job opportunities. He stated, “People may choose to change careers, but I’m not concerned about any of our senior people doing so because I believe both cultures and leaders are committed to ensuring we provide career opportunities for the best and brightest employees.”

IPG CEO Krakowsky added, “At both firms, we have people who build careers with us. Whether it's conversations with senior clients who recognise the benefits or discussions with our leadership, there is, at least on our side, real and palpable excitement. Being part of a platform with exceptional talent, reach, and capabilities—and knowing you can leverage that for your client—offers a tremendous opportunity."

He also said that the change in administration and the attitude towards business, at least in the US, will make it more business-friendly.

While Wren and Krakowsky haven’t yet decided how IPG will be integrated into the Omnicom portfolio, Wren mentioned that this will be addressed only after regulatory approval. 

In the meantime, they will explore the best possible scenarios that prioritise client growth and employee well-being. 

He also shared a message to his employees: "If you're associated with any revenue stream at all, you're gold. Don't worry about it. We will fix whatever we need to, so that’s not a pressing issue. No one should be concerned."

Back up plan

If the deal gets regulatory approval, it will create the advertising industry’s behemoth, with a combined revenue of $25.6 billion and a valuation of over $30 billion. After the deal closes in the second half of the next year, the merged entity will generate annual cost savings of $750 million. 

Given the size of both companies and the potential for reduced competition in the advertising industry, regulators may examine the deal closely to ensure it doesn't harm market competition or lead to monopolistic practices. 

The past experiences, such as the failed Omnicom-Publicis merger, highlight the complexity of such deals. However, if the companies can demonstrate that the merger will not harm competition and will provide mutual benefits, approval could be granted—though it may take time.

Wren, who doesn’t want to burn his hands twice, told investors during the call that both Krakowsky and him have taken “very serious legal advice from two outstanding legal firms. We are pretty confident that this is not going to create any regulatory issues.” 

He said, “10 years ago and about eight or nine months into the Omnicom-Publicis merger process, China was holding up the Publicis-Omnicom merger. I recall being asked by an analyst on a first-quarter call—I can't remember the exact year—about Omnicom’s Plan B, and at that time, I said there wasn’t one. In this case, however, we do have Plan B and Plan C. We have prepared for those contingencies and are ready to take whatever steps are necessary to meet regulatory requirements.”

Taking control of own future

With a combined $30 billion in revenue, the merger strengthens their position in the market, enabling them to rival the enormous scale of big tech companies like Apple, Google, Meta, and Amazon through innovations in technology, a larger canvas of consumer insights, end-to-end advertising solutions, and expanded scale and reach. 

For the record, even Uday Shankar in India intends to take on the big tech in the digital advertising business through the formation of JioStar. 

Coming back to Omnicom-IPG, Wren also said during the call that the “world isn't divided into four companies.”

He added, “This move allows us to take, take control of our own future, rather than wait for technology to impact it in ways that you can't anticipate today.”

Talking about the timing of the IPG acquisition, Wren said, “Our companies complement each other in several ways, particularly geographically, enhancing our presence in Latin America, Asia, and North America. This merger strengthens our exposure in these regions and leverages investments in data platforms like Acxiom, Flywheel, and OMNI. By combining our efforts, we can better monetise these assets across a broader client base than either company could alone. We’re also bringing together a world-class team recognised for their talent, further enhancing our capabilities.” 

He added that in an environment where generative AI and dynamic content creation are key, the combined resources will allow the duo to invest more in cutting-edge technologies, enabling better client outcomes. 

“With increased financial agility, we can take greater risks and provide more accurate information to help clients meet their goals. The merger also strengthens our positions in high-growth areas like experiential and healthcare marketing. By pooling resources and investing in innovation, we’re better positioned to meet the evolving needs of our clients and stay ahead of industry trends,” commented Wren. 

Krakowsky added that with technology shaping every aspect of advertising and marketing, the ability to combine resources and make strategic investments will allow us to scale innovation more effectively. “This puts us in a stronger position to adapt to the evolving global landscape, enabling us to invest and innovate at a faster pace—ultimately placing us in an advantageous position moving forward,” he said.