Omnicom and IPG Fight a Perfect Storm on the ‘4 Cs’

In what is without a doubt one of the top five episodes of Seinfeld, George is regaling his moment as a “marine biologist” with Jerry, Kramer, and Elaine: “The sea was angry that day, my friends, like an old man trying to send back soup at a deli!” George’s “perfect storm” also perfectly captures what has happened to two of the most successful holding companies in the industry in 2024. IPG started all this holding company malarky. In 1961, Marion Harper, then CEO of McCann-Erickson, changed the name to Interpublic Group, and five years later they had 91 offices in 47 countries and 8,500 people. Fast-forward to 1986, when Allen Rosenshine, Keith Reinhard, and John Bernbach (son of Bill) pooled resources to form Omnicom—both firms became stalwarts of the industry, as well as archrivals, with deep relationships with Apple, Pepsi, Visa (OMC), Coca-Cola, L’Oréal, and Nestlé (IPG). Yet, a funny thing happened on the way through the twenty-first century. Both became caught in a perfect storm of competitive pressures—from consultants, creative hotshops, competitors, and even their own clients. These “four Cs” are the core factors that have driven this unholy marriage of December 2024. The perfect storm of the consultants When Brian Whipple, former CEO of Accenture Interactive, was asked if consultants were eating agencies’ lunch, he famously said, “I think we’re actually dining in a much better restaurant.” As marketers’ needs have matured in the last 10 years, the much-vaunted “digital consultancies” of Huge, R/GA, and Critical Mass have struggled against the likes of Deloitte, Sapient, Accenture, and others. Michael Farmer’s 2023 book on IPG’s Huge, Madison Avenue Makeover, was ironically a harbinger of an ugly ending with the agency sold off last week to private equity, just before the Omnicom acquisition. Consultancies sure lack the creativity of a BBDO or McCann, but with David Droga and others taking the lead, they can more than pull their own weight. The perfect storm of the creative hotshops The days of the long-term “creative AOR” are going the way of the three-martini lunch. Marketers want choice, flexibility, and, increasingly, to talk to agency owners with skin in the game. The incredible growth of Mischief, the resiliency of Wieden+Kennedy, General Motors this year appointing three independents to what has typically been an Interpublic-led scope—all these are about diversity of creative options, not consolidation. This trend shows no sign of abating, and large marketers—Kellanova and Tombras, McDonald’s and Wieden, General Mills and Mother, among others—have now institutionalized the need. The perfect storm of the competitors Publicis made over $6 billion of acquisitions in recent years—and not all of them paid out. But what they have done better than most is listen to the Marc Pritchards of the world, who said, “Your complexity should not be my complexity.” PG One is now a powerful Publicis unit, cross-discipline and beyond the petty politics powering Procter’s work. That holding group has done similar models for Pfizer, GSK, Citi, Samsung, and a host of others. Meantime, IPG has also now finally fallen on the sword of principal media buying, something former CEO Michael Roth was so adamant they would never do. The other holding groups have had a multiyear head start. The perfect storm of the client agencies At 1 Infinite Loop in Cupertino sit 1,000 talented creatives, spending their days developing new content for Apple—talent that, once upon a time, was something they would lean on Omnicom for. The in-house agency growth continues at a pace: Unilever, one of Omnicom and IPG’s largest clients, has more than 1,000 talents across 28 offices through U-Studios. 82% of U.S. marketers now have some kind of in-house setup—and while it’s also true that 95% of marketers also rely on external agencies, it’s the content-at-scale work that Omnicom’s eg+, Interpublic’s Craft, and others were born to do that is being siphoned off. In recent years, P&G took media buying in the U.S. away from Omnicom. The perfect storm has so many vectors. What hope in the perfect storm? For this new partnership to work, it’s going to need its own set of four Cs. Collaboration: Breaking down the walls to drive better outcomes. Consistency: Large global marketers expect similar levels of quality in New Delhi as they receive in New York. This was always a foundation of great agencies like McCann-Erickson for Coca-Cola, Nestlé, and others. Today, don’t ask any health care marketer about the capability of agency operations outside the U.S.—the answer may surprise you. Creative: If 82% of marketers have in-house talent, then the bar can only be higher to go outside and find world-class thinking. Both holding companies have incredible creative chops between the six global agency networks as well as boutiques like adam&eveDDB, Goodby, Lucky Generals, Martin, and others. Big ideas need to travel. Client-centricity: Obvious to say, but never easy to do while you are looking for $750 million of loose change in the couch cushions of “synergy.” The new holding group has to somehow balance the needs of Wall Street with their ongoing client demands and keep both happy.

Omnicom-IPG

Omnicom and IPG Fight a Perfect Storm on the ‘4 Cs’

Both companies survived the same competitive pressures—and will need new synergies for their partnership to work

Greg Paull

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