John Wren and Philippe Krakowsky Reveal Their Strategy Behind the Mega-Merger

Omnicom CEO John Wren and Interpublic Group (IPG) CEO Philippe Krakowsky were in merger talks for eleven and a half months before the transaction was announced on Monday Dec. 9. It's been more than ten years since the derailed merger between Omnicom with Publicis Groupe and this time, Wren made sure there was agreement between the two holdco leaders before closing the deal. “We didn’t venture into this until I had cleared all those cobwebs out making sure we were completely aligned,” Wren told ADWEEK. Both Wren and Krakowsky said the merger was focused on combining each holdcos' major assets, such as IPG's data company Acxiom, Omnicom's commerce company Flywheel, two media buying units, a slew of iconic ad agencies, and more. “This was always a strategic conversation," Krakowsky said. The merged companies will be called Omnicom, and company leadership anticipates it will cut $750 million in costs within the first two years of closing, primarily by merging back-office capabilities, vendor partnerships, and real-estate. “I’ve said this repeatedly, and I mean it: anybody out there who is servicing revenue through either IPG or Omnicom today, your jobs are safer this morning than they were last night,” Wren said. This conversation has been edited for length and clarity. ADWEEK: John, why do this deal now, and what makes you think it’ll work this time? JOHN WREN: The two companies share core common values. Many people who have been at Omnicom or IPG have been part of each other’s groups. We took time and paced ourselves. We didn’t rush to any conclusion based on the day-to-day challenges or opportunities we were facing in our companies. We were very thoughtful in going through this process. PHILLIPPE KRAKOWSKY: This is about leaning into all the ways in which we can help [our clients]. We need exceptional tools around different kinds of data, the ability to use that to make decisions, the willingness to put skin in the game as it relates to outcomes. Where exactly do you see opportunities to streamline the network? WREN: Up until recently, the cost of entry to compete with any of us was pretty low. Today, you need very sophisticated tools, platforms, and technology. We have assets that complement each other on that journey. Instead of each of us individually resourcing that, we can build it with the combined resources of both companies, and built properly, and build it once. Our vendors are going to have to negotiate with a bigger buyer now. Being two corporate, public companies, we need one management team. Who you call to find out whether your medical benefits will be processed—those things can be centralized. Accounting, billing, can be centralized. But when it comes to revenue generation, that comes down to [providing] the very best people with the very best tools. You’ll have a lot of global creative networks now. Do you need to simplify that over time, and what might that look like? WREN: I attract and retain clients through talent. What’s attracted talent is the brands and the culture of those brands. That’s not going to change. Unlike our competitors, we don’t start off with, ‘We have to bang things together to make them look neat so we can articulate them to parties that are not buying our services.’ KRAKOWSKY: That doesn’t mean there are not times when putting an organization closer to another means that their capabilities can inform one another. We have got to connect [the creative agencies] more to the rest of the enterprise and our platform capabilities, and then we have to see that we’ve got the best talent sitting inside them. What benefits does the merger give IPG in principal media buying? KRAKOWSKY: 18 months ago, it became evident that was a dimension to the offering that is now table stakes. We began to build it, and this clearly accelerates that dramatically. John and his team are exceptionally capable at it in a very transparent way. Clients understand precisely what’s being done and how value is being generated. IPG put a few agencies up for sale before this deal was announced. Are you still planning to sell those agencies, specifically R/GA? KRAKOWSKY: Those were in areas where the capability set used to be unique, and therefore it was premium. You can now get done what used to get done at some of those agencies, whether it’s inside of media agencies, or performance, or PR. Some of that work happens at the better versions of an integrated ad agency. There will be a period between now and close where we keep doing our thing as an independent entity, and we want to be the strongest version of Interpublic when we come to the Omnicom family. So, we’re not going to stop making what we think are smart business decisions.

Omnicom-IPG

John Wren and Philippe Krakowsky Reveal Their Strategy Behind the Mega-Merger

Omnicom and IPG chiefs tell ADWEEK why now, which jobs are safe, and how principal media buying will surge

Alison Weissbrot

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