Omnicom announced yesterday that it has reached a deal to acquire Interpublic Group, in a stock-for-stock deal which will create a business worth over $30 billion – the biggest agency holding group in the world. The deal, which is still subject to shareholder and regulatory approval, is expected to close in the second half of next year.
Omnicom says the deal will “bring together the industry’s deepest bench of marketing talent, and the broadest and most innovative services and products, driven by the most advanced sales and marketing platform”, according to a statement put out by the group.
But what will each holding group bring to the table, within the merged company? Here’s a look at the key figures:
The headline figures
Before the acquisition was announced, Omnicom was roughly twice the size of IPG going by market cap – Omnicom was valued at $20.2 billion, compared to IPG’s $10.9 billion.
The gap between the two isn’t quite so big when looking at revenues. For the first nine months of 2024, Omnicom’s revenues were $11.4 billion, compared with IPG’s $7.8 billion, making Omnicom roughly 50 percent bigger than IPG.
Specialties in data and retail
The two have plenty of overlap in the areas they operate in and capabilities they cover.
They both work extensively across the creative and media sides of advertising. On the media side, Omnicom’s OMG houses OMD, PHY and Hearts & Science, while IPG Mediabrands owns UM, Initiative, Mediahub, Kinesso, and Magna. On the Creative front, IPG’s McCann Worldgroup, FCB, and MullenLowe all offer creative services while Omnicom’s newly formed Omnicom Advertising Group covers BBDO, DDB, and TBWA.
Looking at their combined media and advertising offerings, Omnicom’s total business is around 50 percent bigger than Interpublic’s. Over the first nine months of the year, total media and advertising revenues for Omnicom hit $6 billion, while IPG’s reached $4.4 billion.
IPG’s data unit Acxiom will be a major draw for Omnicom here. IPG bought the business, which builds and deploys identity solutions to help unify and deploy datasets across brands’ marketing activities. While data has been a big focus for Omnicom, it doesn’t have a comparable asset within its existing business.
Looking at precision marketing – a business category defined by Omnicom as including digital and direct marketing, digital transformation consulting, and ecommerce operations among other things – Omnicom has a much bigger business. Precision marketing revenues in the first nine months of this year reached $1.3 billion for Omnicom, and $486 million for IPG.
Omnicom’s Flywheel, the digital commerce platform it bought for around $835 million last year, is Omnicom’s key asset here. On this front, IPG doesn’t have a comparable asset. And the two companies say there is strong potential in bringing together Flywheel and IPG’s Acxiom, along with Omni and Interact (Omnicom and IPG’s specialists in consumer behaviour data respectively), creating an “identity solutions platform with the most comprehensive understanding of consumer behaviours and transactions, allowing [the merged company] to deliver superior outcomes for clients at scale and speed”.
Complementary assets across the portfolio
While Flywheel and Acxiom were picked out as the big prizes in each company’s portfolio by analyst commentary when news of the merger first broke, there are further synergies within the two companies’ offerings.
Both companies have sizeable healthcare businesses – and in fact IPG’s is slightly larger. IPG’s healthcare revenues reached $1.1 billion in the first nine month of the year, just above Omnicom’s $1 billion. Speaking on a call discussing the transaction, Omnicom CEO John Wren said that once these two offerings are brought together, “there is no one who can even come close to serving whatever a pharmaceutical company wants to do” as well as Omnicom will be able to.
Experiential marketing is another area where IPG’s offering is bigger than Omnicom’s. IPG’s xperiential revenues this year hit $951 million, almost twice the size of Omnicom’s $523 million. IPG’s CEO Philippe Krakowsky noted on the call that while this is still one of IPG’s smaller revenue streams, it’s a fast growing one.
It’s not a specific discipline within Omnicom’s accounts, but Omnicom’s principal media offering will strengthen IPG’s recent efforts to grow that part of its business. “This meaningfully accelerates our ability to deliver that, and move along that track with much more certainty,” said Krakowsky.
But while there are several standout areas where the two agency groups’ offerings complement each other, Wren stressed that there’s plenty of other, more niche areas where there’s value to be found. He cited CRM specialists as an example – while Omnicom is strong with Adobe, it has a hole in its business when it comes to Salesforce, and IPG fixes that. “When you get into the guts of what’s in each others’ portfolios, it’s quite extraordinary,” he said.
Markets and clients
Both IPG and Omnicom are US-based, and US revenues account for the majority of their business in both cases. And their US businesses are comparable in size – US revenues for Omnicom so far this year are just shy of $6 billion, compared to $5.1 billion for IPG.
IPG has higher revenues in both Latin America and the Middle East and Africa, two fast growing markets, positioning the combined entity on both fronts.
But generally, the IPG acquisition will mean Omnicom’s business is more heavily weighted towards the US, and less heavily weighted towards Europe than it currently is. In its most recent quarter, 52.5 percent of Omnicom’s revenues came from the US, 11 percent from the UK, and 16.9 percent from Europe. Post merger, roughly 58 percent of revenues would come from the US, 10 percent from the UK, and 13 percent from Europe, judging by results so far this year.
On the client side, IPG has higher revenues from pharmaceutical and financial services clients, and roughly equal revenues from retail clients despite having significantly lower overall revenues. So post-merger, Omnicom would become more concentrated in these three sectors.
There’s obviously the potential for client conflict in these areas particularly, but John Wren believes this won’t pose too much of a problem. “It’s really not the same issue that it was in the 80s and the 90s and the early 2000s,” he said. “Clients have gotten far more sophisticated. If you look through any of the portfolios of any of [the holding groups], if an outsider were to look at it they’d say ‘isn’t that a conflict, and doesn’t that create issues for you?’”.
Wren said the two companies will have to sit down with clients in the coming weeks and months and “assure them that [they] still love them as much”, but he doesn’t anticipate any major issues.
