Omnicom-IPG merger unlikely to shake up Indian market in short term

New Delhi: As the merger of Omnicom and The Interpublic Group of Companies is expected to create the largest holding company globally, it is unlikely to change much in India, industry veterans told BestMediaInfo.com.

The merger was brewing at a global level and Indian leadership had no clue until the media reports emerged on Sunday.

With a combined revenue of $25.6 billion and a valuation of over $30 billion, the merged entity will retain the Omnicom brand name.

“All these numbers are largely from the US markets and other leading markets. In comparison, India’s contribution to this is very minuscule,” said an industry veteran.

In India, WPP’s media arm GroupM had a roughly 40% market share, while IPG Mediabrands had a market share of about 20%. While Publicis Groupe held the third position, Omnicom Media Group’s market share in India was not significant enough to overtake GroupM.

“Even after the merger, WPP will continue to rule the Indian market and there will be no impact on the pecking order - GroupM, Omnicom (IPG Mediabrands) and Publicis Groupe,” said the industry veteran quoted above.

Recently, Tata Motors moved its business from IPG Mediabrands to Omnicom Media Group. 

A media analyst told BestMediaInfo.com that it is not a business gain in the new scenario. 

However, the analyst pointed out that the loss of Amazon's business to GroupM might have put pressure on IPG both in India and globally.

The deal is for the US where it may take up to 7-9 months for regulatory approvals. 

After the deal closes second half of the next year, the merged entity will generate annual cost savings of $750 million. 

The savings would be spent on enhancing the quality and breadth of services available, particularly in areas like digital transformation, data analytics, and AI-driven marketing solutions.

“As per my understanding, the merged entity will use those savings to navigate better the challenges posed by tech giants like Google and Meta, which have been encroaching on traditional agency business models,” said the media analyst.

Omnicom will focus on the Indian market but about a year later and this gives time to other giants including WPP and Publicis to strengthen their respective forts, the analyst added.

When quipped about the impact on jobs in India, the analyst did not rule out the possible job losses at the top level citing the projected savings of $750 million that the merged entity is aiming at.

Globally, the current Omnicom leadership will lead the JV with John Wren as Chairman & CEO and Phil Angelastro as EVP & CFO of Omnicom.

Regionwise, the leadership may be decided by looking at the strength of the agency brands in different markets.

For example, Omnicom is very strong in China, and IPG is strong in India. 

“First the regulatory approvals would come in about eight months. Almost similar time would be required for the merged entity to set its US business on track. Then the focus would shift on regional markets including India at least about a year from now,” the media analyst added.