Ad Age reached out to several clients of both Omnicom and IPG, and most did not provide public comment.
Some of Omnicom’s largest clients include AT&T, Amazon, PepsiCo, Volkswagen Group, Nissan, Mercedes-Benz and Apple. IPG’s client list includes Geico, American Express, General Mills and General Motors.
Charisse Hughes, senior VP and chief growth officer for IPG client Kellanova in a statement to Ad Age said: “We have immense respect for both agencies and are confident that their focus on delivering strong client outcomes will remain unchanged.” Vinay Shahani, senior VP of sales and marketing at Nissan North America, said it is “business as usual for now because Omnicom can’t say much publicly yet, but we look forward to seeing how this plays out.”
The biggest rationale for the deal is that the combined company, which would create a global behemoth with combined 2023 revenue of $25.6 billion, will have the scale required for modern marketing, which is dependent on sophisticated data and AI technologies. Wren, in a statement, touted the new entity as having “highly complementary data and technology platforms enabling new offerings to better serve our clients and drive growth.”
During the call with investors, Wren discussed whether clients might walk away because of the pending deal. “It’d be short-sighted for a big client to go through changing to a different vendor and discarding either two of us, because we have to wait for a regulatory approval in order to get on with this,” he said. “So, could it happen? Yes. Will it happen? Yes. But I think people will be short-sighted in doing that.”
One veteran chief marketing officer noted that the acquisition could lead to less natural competition as it creates “more of a walled garden.” The marketing executive, who spoke under condition of anonymity, said that Omnicom and IPG together will create efficiencies, but it’s unclear what the value proposition will be for marketers.
“They will clearly push more to sell end-to-end solutions at the holding company level,” the marketer said, noting the uncertainties, including benefits and drawbacks, for brands with such a push.
Indeed, with one less major holding company player, agencies could gain some pricing leverage over clients.
“The removal of one significant globally capable agency group would help improve competitive dynamics in the favor of all agencies when large clients seek to play agencies against each other in order to drive pricing for services down,” Brian Wieser, CEO of industry research firm Madison and Wall, wrote in a report about the merger.
“This kind of consolidation is necessary for larger agencies given the continued cost pressure of the industry,” said Erick Dickens, a fractional CMO who operates a consultancy called Approach Marketing. “Unfortunately, it will likely result in higher prices and less creativity for clients. I suspect the combined entity will lose current clients as the mix of higher prices and lower creative quality becomes evident,” adding that the “real winners” could be “boutique shops that are able to maintain high levels of creativity without the overhead.”
Deb Giampoli, a former agency relations director for Mondelēz International who now runs a consultancy called Stone Soup Consultants, echoed that skepticism. “I haven’t heard anything about the benefit to clients from the merger,” she said. “Bigger doesn’t immediately translate into better. Lots of talk about cost savings, layoffs and ‘efficiencies.’ And by bringing agencies together, it likely means less differentiation.”
Joanne Davis, founder of agency search firm Joanne Davis Consultants, said that while the deal might help larger clients gain clout with media buying, “for smaller spending clients concerned about getting lost and talent leaving legacy agencies, it may cause them to look at other smaller agencies.”
Contributing: Adrianne Pasquarelli, Erika Wheless and Ewan Larkin
