The Creative Agencies to Watch in the Omnicom-IPG Merger

Industry insiders predict that Omnicom Group’s takeover of Interpublic Group (IPG) will likely lead to the consolidation and elimination of legacy creative agency brands. Omnicom announced on Monday (Dec. 9) that it is acquiring rival holding company IPG, creating the world’s largest advertising group. The new company will be called Omnicom, and leadership anticipates it will cut $750 million in costs within the first two years of closing. Omnicom CEO John Wren told ADWEEK that “anybody out there who is servicing revenue through either IPG or Omnicom…your jobs are safer this morning than they were last night.” But industry observers anticipate the combined company will follow the pattern of rival holdcos by consolidating agency brands. “Consolidation is coming in a big way,” a consultant and former agency CEO told ADWEEK. Omnicom owns ad agencies including BBDO, DDB, TBWA, Goodby Silverstein & Partners and more, while IPG’s creative agencies include McCann, FCB, Deutsch, The Martin Agency, and MullenLowe, among others. Combined, the new Omnicom will have six global creative agency networks and a handful of regional shops. Consolidation would follow a wider industry trend. Last year, WPP merged Wunderman Thompson and VMLY&R into VML, and Publicis Groupe has leaned into its Power of One proposition to sell itself in pitches on an integrated offer across creative, media, data, and more. According to Greg Paull, CEO and Principal at R3, the merged company operating six global creative brands seems unlikely. “Some consolidation as has been seen at WPP and elsewhere would be expected.” Distinct brands and smaller shops are more likely to be protected IPG and Omnicom have been staunch advocates of maintaining distinct agency brands to attract clients and talent, even as holding company back-ends become more consolidated. But $750 million in promised cost savings is “going to create a lot of friction in the merged group,” Paull said. “As WPP and Publicis have already discovered, it’s a challenge to have a large suite of creative agencies under one holding company,” he continued. “Both Omnicom and Interpublic have already been run very efficiently, so finding these savings will need to come through internal consolidation.” The former agency CEO said it is likely that Omnicom will “organize under authentic points of difference” and place “more emphasis on capabilities,” rather than agency names. The shops that persist under the new entity will be “those that have a differentiated point,” he added. He pointed to McCann, which is an international network, and The Martin Agency--a “mainstream American agency” that appeals to U.S. brands like Geico--as having distinct brands in the market. Donna Sharp, managing director of MediaLink and partner at UTA, said that IPG agencies often requested in pitches include Martin, FCB, and Deutsch. “While IPG has obviously been making some trims, they still own a sizable number of really competitive creative solutions,” she said. One agency founder that previously worked at Omnicom believes that smaller agencies in both networks might be safer, as the company will look to bigger networks to find savings. “ I don't think [small agencies are] where the energy and the cost savings come from,” they said. Consolidation can be a selling point with clients that want to access multiple services across one provider, the agency founder said: “That’s what the clients are asking for [in many global pitches] … they want the full support of these mega, multinational holding companies.” IPG and Omnicom are already on this path. Earlier this year, Omnicom unveiled Omnicom Advertising Group, a new structure that aligns its creative agencies under one leadership team. And IPG sold Deutsch New York and Hill Holliday in January, and last week, it sold digital agency Huge to Private Equity firm AEA Partners. R/GA is also up for sale. “There's probably an opportunity for Omnicom to look at the value of their individual brands and what they command in the market,” said Sharp. The downsides of consolidation Andrea Kerr Redniss, managing director of MediaLink and partner at UTA, said many clients still want the choice of working with distinct creative agencies that can offer different capabilities. “Brands still want to have a roster of creative agencies as opposed to just one, so there is a benefit to [a holding company] keeping multiple creative agencies,” Redniss said. Client conflict could also come up as a sticking point as IPG and Omnicom combine their rosters. “As with any talks of scale, conflict management will also raise its head,” Paull said. As these issues crop up, Sharp predicts that independent agencies could see some upside, as they will be even more differentiated from and nimbler than “the big, big agencies who just keep getting bigger.” Independents could also benefit from a potential talent and client drain as Omnicom and IPG await regulatory approval for the merger. “If there's going to be a loss of talent within the holding companies, that means there's going to be amazing talent available in the market,” Sharp said. Regardless of how and when consolidation takes place, the former Omnicom executive said now is the time for agencies within both networks to prove their value and distinctiveness. “This is your chance to prove the value of your operation and also show what a great leadership team you have,” they said. “Make it something that cannot be consolidated because it's too successful. I would urge people to play offense and not defense in this moment.”

Omnicom-IPG

The Creative Agencies to Watch in the Omnicom-IPG Merger

Industry experts agree that consolidation among the new holding company’s creative networks will be inevitable.

Brittaney Kiefer

Kyle O’Brien

T.L. Stanley

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