If Omnicom Group is successful in buying Interpublic Group of Cos., the massive deal would not only bring some of the agency industry’s biggest brands under a single roof, it would put intense pressure on WPP, which would lose its long-standing status as the world’s largest agency holding company.

“It sounds like it’s a plot to kill WPP and make it a two-horse race with Publicis on a holding company level,” said a former Omnicom agency executive.

More on the news:

• Indie creative agencies react to the Omnicom-IPG deal
• What the pending acquisition means for clients
• How the deal hinges on data and automation
• Key executives to watch
• How Omnicom-IPG would stack up against the industry
• More reactions

The proposed merger, which the Wall Street Journal on Sunday reported could be finalized as soon as this week and which the companies confirmed on Monday, would create a global behemoth with 2023 combined revenue of $25.6 billion, putting Omnicom back at the top of the holding company heap. (For reference, the proposed merger of Omnicom and Publicis, announced in 2013 and aborted in 2014, would have created a company with 2013 combined revenue of $23.8 billion.)

By comparison, Brian Wieser, CEO of industry research firm Madison and Wall, noted that WPP’s net revenue was $15 billion last year and Publicis’ was $14 billion. As recently as last week, Publicis in its annual holiday video bragged it was about to become the top holding company, which will be derailed if this deal goes through. (Those net revenue figures exclude pass-through costs. When pass-through costs are included, WPP’s revenue in 2023 was $18.5 billion, and Publicis’ was $16.0 billion.)

Omnicom and IPG did not respond to requests for comment. 

If completed, the deal would be the largest-ever agency holding company merger by far, topping Japanese agency firm Dentsu’s 2013 acquisition of Aegis Group, a London-based agency company, for about $4.9 billion.

Why it makes sense

A main driver of the deal is the promise of more robust analytics and media services, which have become some of the most lucrative businesses at holding companies.

“The Omnicom IPG acquisition is about scale: scale of technology, data, media clout and the ability to produce content at the velocity and volume of media impressions,” said Jay Pattisall, VP and principal analyst at Forrester. “The combination of the Omni marketing platform and [IPG’s] Acxiom data capabilities would put Omnicom on a more level playing field with Publicis Groupe and its Epsilon division.”

There is “tremendous industrial logic to two large agency groups combining,” Wieser wrote in a report on Sunday, suggesting that in addition to gaining back-office efficiencies, the deal would create an agency group with more scale to “be better positioned to invest against people, partnerships and technology capabilities oriented towards a world where AI and scaled investments are required to best service large brands.” 

Another possible driver is a stronger emphasis on so-called principal-based buying, which refers to the practice of media agencies buying media and reselling it to clients. IPG CEO Philippe Krakowsky in October pledged to invest more in principal-based media buying, conceding that other holding companies are better positioned in this space since they embraced this way of operating sooner. 

Principal-based media buying will not be a sustainable business model with multiple holding companies competing with one another, said ID Comms CEO Tom Denford. By consolidating, however, holding companies such as the potential Omnicom-IPG entity can gain more control over media buying and transactions—which would further reduce transparency for clients, he added.

“This deal is not about providing any immediate benefits to advertisers. It is really about agency survival,” said Denford. “Advertising agencies are facing the risk of becoming obsolete if they don't grow and they are having to change the roles they play with their clients to stay profitable.”

Others were skeptical about the reasons for the deal. “I suspect it’s very financially motivated and that’s about it,” said a former Omnicom agency executive. “There are strategic benefits in each business where they have gaps, and as real growth becomes harder to find, consolidation remains their go-to.” 

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Impact on WPP and Publicis

While the merger would create a two-horse race for the second-largest agency holding company between WPP and Publicis, Wieser said Publicis could be poised in the short term to win over clients or executives looking to move on post-merger.

Some experts believe that, because of acquisitions such as Influential and Mars United Commerce, the French holding company would still be well-positioned over the combined Omnicom-IPG entity, as well as WPP.

“While they may not be the biggest if this goes through, they may arguably be the better integrated of the holding companies,” Ryan Kangisser, chief strategy officer at consultancy MediaSense, said of Publicis. 

Another industry executive, who asked not to be identified, said that WPP and Publicis are furthest ahead of the holding company pack when it comes to AI. In January, Publicis invested $326 million in Core AI, and that same month WPP committed to spending $318 million annually in AI.

This move likely puts more pressure on WPP, which has had flat revenue in recent quarters. WPP has been merging its entities over the past couple of years and also considered its options if it were to go private, according to multiple people close to the situation.

If the merger were to go through, the new entity would likely become the largest player in the U.K., a status currently held by WPP, which could add more pressure on top executives at the holding company. “They might feel more pressure at the board level of WPP, because they have not had a coherent strategy,” Wieser said.

WPP and Publicis declined to comment for this story.

Why this merger may not fall apart

The proposed merger of Omnicom and IPG would come a decade after Omnicom and Publicis Groupe aborted their grand merger. That so-called “merger of equals” fell apart in 2014 after infighting over who would run the combined entity. Omnicom CEO John Wren and Publicis’ then-CEO, Maurice Lévy, were to be “co-CEOs” for 30 months after the merger.

But a similar power play is unlikely to derail a combination of Omnicom with IPG.

“Comparisons to the failed Omnicom/ Publicis Groupe merger miss the point,” said Pattisall. “Omnicom’s purchase of IPG is not a merger of equals, rather an acquisition in which IPG will most likely be absorbed into Omnicom, similar to how MDC Partners was absorbed by Stagwell.”

Moreover, Denford said the ad world has changed since 2014, and now there are “fewer egos running agency groups.” Executives such as Lévy, former WPP CEO Martin Sorrell and former IPG CEO Michael Roth have all departed their respective companies, “replaced by good operators with a little less emotional drive, opening up the possibility of mergers completing,” he said.

Changing client priorities are facilitating more agency group deals, too. Over the last 10 years, advertisers have become “far less sensitive to competitive conflicts” and accepted that agency consolidations can be financially beneficial, outweighing any “emotional sensitivities they might have about working with the same agencies as their competitors,” Denford said. 

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Wren’s legacy

The deal, if completed, could be the capstone to Wren’s long reign at Omnicom and a do-over after his failed earlier merger.

A deal would provide “John [Wren] with the legacy of being the biggest, and give Philippe [Krakowsky] the exit plan he’s been looking for,” a former Omnicom executive said.  

Krakowsky, who became CEO in 2021, was 61 as of IPG’s April 2024 proxy statement.

Wren, 72, has been CEO since 1997 and board chairman and CEO since 2018. Under Omnicom’s “mandatory retirement age policy” for board members, Wren would need to retire from the board no later than 2028, the year after he turns 75. However, the Omnicom board “may waive this limitation for any director if the board determines that it is in the best interests of the company and its shareholders to extend the director’s service.”

Some of the speculation is on Wren’s likely successor, Daryl Simm, president and chief operating officer, to become a lead player in the combined entity. Other executives to watch are Duncan Painter, CEO of Omnicom’s Flywheel, and Jacki Kelley, the chief client and chief business officer at IPG, both of whom sources say have become significant players within their respective holding companies. Luke Taylor, CEO of Omnicom Precision Marketing Group, is also expected to be a key player.

More deals could be ahead

While some people expressed surprise over the idea of another mega-merger, others said they expect more deals in the ad space, possibly involving private equity.

Michael Fassnacht, a former CEO and president of the Chicago office of IPG’s FCB, suggested the rationale behind an IPG/Omnicom combo was “pretty simple.”

“The advertising industry is under tremendous pressure with slow growth, big price pressure from key clients, and continued competition from tech firms with faster growth and efficient offerings,” he said. “What happens in such a sector? Mergers to consolidate and build more scale.”

Contributing: Brian Bonilla, Bradley Johnson, Ewan Larkin, Judann Pollack and E.J. Schultz