Thoughts on Omnicom/IPG merger
Naysayers suggest the merger may reduce client options and perhaps encourage growth among independent agencies. As thousands of small creative service providers react to the consolidation, the change could increase creativity across the industry.
According to Omnicom’s John Wren, the purpose of the deal to acquire IPG is to scale capabilities in media buying, data, and technology to compete with Publicis. Creativity doesn’t seem to play a big part in his reported thinking.
Omnicom is the second largest holding company, Publicis is number one at the moment, and WPP has been the biggest in recent times.
Wren, and IPGs CEO Philippe Krakowsky, want to reduce dependence on advertising and traditional big-budget creative work. I think this is where competitors will focus much of their efforts to counter these big guys.
They say they want to bring predictable, recurring revenues, long a goal of neoliberal shareholder value focused CEOs, and to become a “premier marketing and sales partner” for clients. “It takes us out of all the baggage that you might find in a legacy advertising group,” Wren said. This makes me think that Wren doesn’t understand how creativity actually works—it’s just baggage.
Together, they say they’ll offer “data and technology platforms enabling new offerings to serve our clients better and drive growth.” I think this is just further evidence that Wren is only focused on Wall Street. That’s his job, of course: creating shareholder value.
Google, Meta, and Amazon have been taking marketing revenue away from traditional agencies for years. Now, they have the resources to create and use AI tools, making it even easier to generate cheaper and apparently more effective marketing.
It seems to me that Omnicom, with the IPG acquisition, is trying to be more like the tech giants. Is that smart? Amazon, Google, and Meta have way deeper pockets, and they own all the AI that Omnicom is counting on. It sounds like playing catch-up with a shrinking hand.
I know that staff, especially creative folk, are worried about their jobs. Omnicom and IPG say they plan to find savings from combining office space, automation, and offshoring in cheaper locations. Wren said job cuts will be focused on “overhead” roles rather than “client-servicing” positions. We’ll see.
I wonder if all this focus on technology will cause the emergence of a whole new crop of human-driven small creative shops that will replace the people doing creative work currently employed by traditional agencies. Perhaps this will drive the big guys to give up on doing creative internally and just get creative from independent shops.
Finally, someone smarter than me has probably already pointed out that if these big holding companies were super healthy and growing ‘same-store sales,’ as they say, these mergers would not be happening. It looks to me like the merger signals weakness in Adland, not strength.
