How the Omnicom-IPG deal hinges on data and automation

The Omnicom-IPG merger comes down to data, commerce and the combination of two technologies through AI, which are areas the holding companies are still trying to navigate as they form their historic team-up. In recent years, Publicis Groupe, a chief rival to Omnicom Group and Interpublic Group of Cos., was adept at executing in data and commerce, and now Omnicom is trying to catch up by acquiring IPG, which owns key assets that could aid Omnicom’s platform, according to advertising leaders. There also are fundamental shifts in ad land that have thrown the holding company model into disarray with the rise of AI and automation, and internet giants such as Google are taking greater control of brand budgets and media strategies, according to ad leaders. Tracking the latest Omnicom-IPG merger news and analysis On Monday, IPG CEO Philippe Krakowsky emphasized the merger partly hinged on a “commitment to invest in data, commerce and AI,” in a call with investors. The effectiveness of the merger will ultimately depend on whether the holding companies can integrate their data properties, and whether their corporate cultures gel. Omnicom has a homegrown data and analytics platform called Omni, and it owns Flywheel, a digital commerce player it bought last year. IPG developed a marketing platform called Interact, built through acquisitions, including data firm Acxiom in 2018. There also is still the matter of whether the deal between two large industry players gets through U.S. regulatory approval. (Ad Age Datacenter ranked Omnicom as the fourth-largest agency company and IPG sixth, in its 2024 Agency Report.) The move could be a harbinger of more consolidation to come, according to one advertising executive who is close to Omnicom and IPG. “In order to have the scale that you need to service both your client base as well as to handle yourself with the large internet companies [such as Google and Meta], you need horizontal platforms at real scale,” said this executive with knowledge of the details of the merger, who spoke on condition of anonymity. “I think that underpins what IPG did, in large part, with Omnicom, and why they were interested.” More about the merger: From a pure data perspective, which is increasingly crucial to advertising and how brands grow their customer bases, the deal makes sense. “Omnicom, in theory, could find their own unique footing in retail media,” said Jared Belsky, CEO of digital ad agency Acadia, reflecting on the IPG acquisition and its implications. “If you combine those two sources together, they would have a lot of compelling data around retail media and shopper behavior to share with their customers.” Retail and commerce media are growing sectors in advertising and are expected to generate $54.85 billion in revenue in the U.S. this year, up 26% from 2023, according to eMarketer. Major holding companies have been trying to capitalize on the retail boom while also contending with all the other competing forces reshaping the business. There are new gaps in the online landscape that cut brands and ad agencies off from important data. Apple, Google and other internet players have limited the signals coming from mobile devices and web browsers; data that ad agencies used to easily tap into for ad campaigns. Trackers such as cookies are going away, taking away insights into consumers as they traverse the web and real world. Retail media has evolved as one answer to the loss of data, as companies with greater data sets can make better decisions in media buying, track sales, and target new customers. “With all the holding companies, in the last couple years, you are starting to see the emergence of these horizontal platforms, tech platforms, that underpin most, if not all, their businesses,” said the advertising executive with knowledge of the deal who spoke with Ad Age. Especially lately, Google has been a thorn in the side of holding companies, this ad executive said, by automating advertising through AI-powered campaigns and full-service offerings. Google tells brands to pour all their money into its automated platform and then let the machines figure out the best way to generate a return on their investments, this exec said. “Google’s pitch is very simple, ‘Give me all your money,’” the ad exec said. “And if that’s the case, what do I need holding companies for.” Data-driven deals Publicis, another one of the agency industry’s biggest players, clearly figured out the new advertising paradigm. That’s where all the other major players have to go now, according to Rachel Tipograph, CEO of e-commerce marketing platform MikMak. Publicis bought data firm Epsilon in 2019; CitrusAd, the retail media software firm, in 2021; and Profitero, the products and retail data firm, in 2022. Publicis also runs Publicis Sapient, a digital consulting arm. Most recently, Publicis acquired Influential, an influencer marketing firm, and Mars United Commerce. These moves show the way advertising and branding is now driven by data, online shopping, and the creator economy building buzz around products through social media, Tipograph said. “It’s allowed Publicis to position themselves in the market, not as a services company, but a company that’s predicated on data and technology with a service layer on top,” Tipograph said, “and all the other holding companies have been asleep at the wheel.” Publicis has been a juggernaut in the public markets, with its share price rising more than 150% over the past five years, compared with a 15% gain for Omnicom Group and a 35% rise in IPG’s stock price. Publicis has a market valuation of roughly $28 billion, topping $18 billion for Omnicom and $11.6 billion for IPG. Omnicom has traditionally been developing its data, analytics and commerce capabilities in-house, and most recently aggressively invested in AI and automation. Omnicom never acquired a major data broker as rivals had done—Publicis with Epsilon; IPG buying Acxiom; Dentsu buying Merkle. Data is a vital component of how ad agencies will be able to execute digital campaigns, but data also is becoming more difficult to use in digital marketing. Last year, Omnicom bought retail media firm Flywheel, which was a recognition that it needed to power up in that area, Tipograph said. When brands are looking for new agency partners, data and commerce media are at the forefront of their decision-making, she said. In recent years, with inflation and hard times especially for consumer products companies, brands are demanding to see value out of their advertising agencies, and that means proving retail media is working and that it fits into strategies that create new customers with lifetime value, Tipograph said. “Full-funnel marketing is going to be a blend of national, digital media and retail media,” Tipograph said. On Monday, Interpublic’s Krakowsky referred to Omnicom’s addition of Flywheel as a core piece of the puzzle: Flywheel is a “real-time transactional data asset allowing them to measure online sales generated from media campaigns across the full marketing funnel,” he said. “The combined company will be able to create the most comprehensive and detailed view of a client’s consumers at every step.” Ewan Larkin contributed Tracking the latest Omnicom-IPG merger news and analysis Become an All Access subscriber Get access to exclusive resources including Leading National Advertisers, World’s Largest Advertisers, Agency Report, Agency Review Tracker and TV Pricing Report. Click here

How the Omnicom-IPG deal hinges on data and automation

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