Orli LeWinter’s Post

YES, THE BIG FISH ALWAYS EAT THE LITTLE FISH, BUT SOMETIMES THE BIG FISH ALSO EAT OTHER BIG FISH. A CASE IN POINT ... Very surprising news for me as an IPG alumnus, but first let’s look at some financial facts: As of year-ending 2023, WPP is the #1 largest agency holding company jn the world at $17,375M in annual revenue (up +2.8% YOY); Publicis is #2 at $15,823M (up +6,3%); Omnicom is #3 at $14,692M (up 3.1%); with #4 Interpublic (IPG) at $10,890M (down -0.1%), https://lnkd.in/eWR66B5P. So, if you’re the smaller and not growing IPG and want to grow against your Top-3 agency holding company competitors, what do you do? Well, this Omnicom/IPG merger is the immediate answer in creating a new agency holding company at $25,582M in combined annual revenue. A new advertising, media communications, and marketing research powerhouse that will be hard to beat. Certainly good for clients in terms of integrated services and for holding company shareholders looking for more ROI. As for the employees of Omnicom’s and IPG’s internal agencies, “Good luck!” Because individual agency consolidations and layoffs are surely coming soon. It’s in the very nature of ALL industries and companies when it comes to mergers and acquisitions, and American business history proves that - not my opinion … just another hard fact. 😎 https://lnkd.in/e9JJgDpt

Reading about the Omnicom/IPG merger potential is interesting. M&A has not been as popular among public companies in the market for a while, but that kind of consolidation is seen as inevitable. However, and no offense to the boards of these companies, I think this shows a clear sign of creative decline within the business world and specifically the advertising industry. IPG has a market cap of ~$10B today. That is quite a hefty sum, but compared to other companies in the advertising industry (albeit at a different part of the sales channel) like Meta ($1.5T today) they are still small potatoes. There are plenty of private, and public companies, in that range - which could have potentially been more useful to such a company. I won't be giving away any of those ideas here. Omnicom is worth ~$20B today, so they are twice as valuable on the market as their acquisition target. Nothing new has come out of the advertising industry in a while, from a technical perspective, as well as from a creative perspective. For many people it is a rote industry kind of like light bulbs especially since the advent of "DIY" platforms like social media companies where any individual or business has the ability to purchase (retail prices, perhaps, but nevertheless) ads on their own accord. Here's the kicker...wholesale pricing doesn't really make an impact. Why? Because giant agencies who buy inventory to resell to their clients at the wholesale rate from platforms like Facebook, for example, end up marking those up considerably, as well as charging for covering their massive overhead, etc. Furthermore, there needs to be real reform on social media because botnets and coordinated inauthentic behavior rule the day. That means advertisers (in many cases, they know this too) are getting ripped off - but still accepting it. What will IPG sell themselves for? $25B? Let's say they get that. That doesn't instantly make Omnicom worth more money, and thousands of peoples' jobs will be come redundant. So, massive layoffs incoming for them. In true industrialized fashion, I wouldn't be surprised if other agencies followed. That will slow Omnicom down for at least a year or two (after however long the deal talks take) - and then they'll be somewhat bigger - resulting in a net market cap of...nobody knows. However, it's possible that they net out at a modest increase in valuation over the next few years. Over the last decade, Omnicom has only increased in value by ~33% which doesn't even keep pace with the broader market. That's not a great sign. Needless to say, the advertising industry is going to be going through some changes, and many are looking at new ways to compensate their agencies or advertising contractors. This merger is likely to alienate Omnicom/IPG from that because they will become so massive it won't be easy for them to adapt to such changes. I do wish them luck, but believe they will need a lot of it to succeed.

So Omnicom agrees to buy Interpublic. If it goes through it would indeed be a major shake-up, but is it really what clients and the industry need right now? In an era where in-housing is on the rise and clients are demanding agility and specialized expertise, doubling down on scale feels at odds with the trends. Sure, consolidated teams might promise efficiencies, but at what cost? What will their Publisher deal landscape look like? 🫢 Having been through this before, for employees this likely means layoffs and the loss of niche expertise (hello my B2B friends, we're here if you need us). For creativity—already under pressure from tightening budgets—will it survive when the focus shifts to managing such massive operations? As marketing evolves with AI and intelligent applications, perhaps it’s time to move away from old models of consolidation and instead invest in processes that prioritize agility, creativity, and collaboration. What do you think—does this move help or hinder progress in our industry?

Scale is a story for the markets more than it is the clients. The Omnicom takeover of IPG will make few people very happy, and a lot of people anxious. Primarily the teams within the holdcos, but also the clients, and those vendors who have large contracts with both of the parties. Amid the hype about AI and efficiencies (which shareholders will enjoy immensely) there clear downsides, and a few silver linings. The main downsides: - There will be job losses. Not immediately, but spare a thought for folks who'll be heading into the festive season with this looming over them. - Agencies with duplicated function across the new group will close. - A more concentrated market is less competitive. Costs are likely to go up. - The drive for greater transparency in where ad spend goes will be a steeper uphill battle The silver linings: - Amid the talent churn, some brilliant people will set up new shops. Speed boats will spring up in the wake of the rusty tanker. - Mid-sized clients will look to more agile, dedicated partners, creating opportunities for independent agencies of all shapes and sizes. Predicition: - Per my opening note that scale is a story for the markets more than it is the clients. This acquisition is focused on driving upside through efficiency benefits. This will come at the neglect of a clear focus on growth through servicing client needs, and the results for the new group won't impress. https://lnkd.in/ePiWsJXA #advertising #media #omnicom #ipg #merger

So, Omnicom's proposed deal to acquire IPG is official. That was the easy part. Now they need to get it past shareholders and regulators. Most observers think that should be largely straightforward. The biggest task is the integration of two huge companies with tens of thousands of staff. That involves dealing with client concerns, layoffs, and bruised egos when senior staffers are overlooked for the remaining key roles. The short-term disruption offers opportunities for rivals to poach clients and talent. But in the long term, this deal is all about scale and moving the advertising company further in the direction of the way the marketing world is moving. Current OmnIPG workers (and shareholders) will be hoping that any cost savings are reinvested in areas like tech, AI, data, creativity, and commerce. Read my analysis of the $13 billion advertising megamerger at Business Insider With thanks to Simon Nicholls, Sir Martin Sorrell, Laura Desmond, Simon Francis, Greg Paull, and others who helped with this piece #omnicom #ipg #advertising #agencies https://lnkd.in/gApjZDBu

As with many of my LI connections I spent many formative years between these 2 companies' various agencies, i.e., Omnicom & Interpublic. I don't think it's surprising that such a merger occurs. It appears Omnicom is the actual acquirer in the deal. But hasn't the agency/media/marketing landscape changed so much since these agency networks developed in the 20th century? It seems that Meta, Google, Amazon and others are the real media players with the most profitable share of the advertising related revenue. Largely because of their technology expertise with analytics. In a related article WSJ reports that global advertising spending is about $1 trillion US. That article mentions digital and ecommerce shift trends but without specifics of %. I suspect it's more than 50% now. If that's the case, then the aforementioned digital companies are the most likely dominant players. And we know they generate high growth revenue and massive profits. Omnicom and Interpublic on their own or together cannot and won't post such financials. I don't think they will be able to compete for long. Too much media power has shifted to Google, Meta, Amazon, Tik Tok and other ecommerce players such as Wal Mart who can manage client brand directly to promote on their platforms. More change is a coming. I'm interested in the thoughts of other agency veterans and observers. https://lnkd.in/gffxSXnZ

These two Sunday headlines are not unrelated. The bombshell news that IPG and Omnicom are merging...and the fact that ad revenues are going to hit $1 TRILLION and 5 tech companies are gobbling up half of it. Whatever financial voodoo the holding companies were spinning, the magic has definitely worn out as the tech overlords gobble more of the pie. And since most of the ad ecosystem is digital garbage, who needs to pay the holding company vig when the Metas of the world will just have their A.I. robots make the ads for you. Yesterday, in reaction to the Omni-IPG news, a colleague asked, "How is this good for clients?" Nothing about the holding companies is good for clients. Except the fact that their balance sheet is so big, they can give away stuff that any sane business would charge for. ("Happy to lose hundreds of thousands on a year-long pitch, mega-brand, so I can create a bespoke 'shop' for you that will never make up the starting deficit but will allow me to put your logo on our website and keep the yacht at Cannes fueled up!") The Omni-IPG press release will tout "synergies," but the only value in a merger like this is to cut redundant expenses and in advertising, "expenses" = people. Lot of folks going to lose their job and the net effect is that agency land will get smaller. (That shrinking is coming anyway, of course, but this will just hasten it.) What agencies and ad execs will survive the consolidation? Let the Hunger Games begin! But we already know the winners: the tech companies who are collecting all the cash and killed the ad biz, as we knew it.

From NYT: Omnicom Group, one of the world’s largest #advertising agencies, said on Monday that it had agreed to acquire Interpublic Group (IPG), a large rival. If successful, the all-stock takeover would create the biggest ad agency in the world, with more than 100,000 employees and some $25 billion in annual revenue. The deal comes after years of transformation and disruption for the advertising industry, as digital ads overtook analog advertising channels and tech giants including Meta and Alphabet Inc., the respective parent companies of Facebook and Google, moved further into the territory once dominated by traditional agencies. The #tech and consulting giant Accenture has also made a big push onto the agencies’ turf, acquiring dozens of creative studios and related companies. The “Big Four” ad companies — Omnicom, Interpublic, WPP and Publicis — adapted by remaking themselves into digital technology companies, often through acquisitions. John Wren, the chief executive of Omnicom, said in a statement that the acquisition of Interpublic would “harness the significant opportunities created by new technologies in this era of exponential change.” Under the deal, which Omnicom said it expected to close in the second half of 2025, Omnicom shareholders would own about 60 percent of the combined company, with Interpublic shareholders holding the rest. Omnicom executives said they had “clearly identified opportunities” for $750 million in annual cost savings.

The advertising landscape is shifting with Omnicom's acquisition of IPG, creating the industry's largest ad-holding group. But what does this mean for smaller, independent agencies? Cognitiv's CEO, Jeremy Fain, shares insights on how the merger's success will depend on integrating data-driven solutions and delivering continuity for clients during this transition. 🔍 Read the full article in Marketing Dive to learn how the ad industry is evolving and why tech-driven agencies are more important than ever. https://lnkd.in/eS2FFBjg #AdTech #Advertising #MarketingInnovation

Big news in the world of advertising: Omnicom and IPG to merge, creating the world’s largest HoldCo. Keen to see how this landmark deal could unify their respective tech capabilities, and the impact. https://lnkd.in/dfTGPtJJ