The Omnicom & IPG merger is not about cost cutting, it’s about storytelling.
Most likely, the biggest value the merger will create will be this nice transformation story Omnicom can tell clients.
John Wren (Omnicom’s chairman) thinks he has seen the future of the advertising industry.
And acquiring competing advertising holding IPG in the summer of 2025 is the way to get there.
The plan is simple: the combined companies can offer powerful marketing technology tools that no other advertising agency group can. And in the process become more strategic partners to clients.
But as the saying goes, a person has two reasons to do something: a good reason and the real one.
The above sounds like a good reason to merge with IPG, but what’s the real one?
Is this merger all about John Wren just wanting to combine the two companies to become the biggest advertising media buyer in the world? Yeah, maybe.
But then this would be a very short article, so bear with me.
I’ll tell you why. The advertising industry has a perception problem. And this merger aims to fix it. Well, at least for Omnicom.
Ad agencies’ problem is where we sit in the minds of the clients with the big budgets.
We are not anymore in the “this agency has the potential to change the future of my brand” bucket. We were there back when the destiny of a brand could change with an amazing film in prime time television.
But times have changed. And we haven’t.
We descended into the bucket of “I still need someone to buy media and develop creative work to run my marketing department”.
The first bucket has become the territory of the consultancies, where perception of value is perhaps undeservedly high and advances in technology offers the potential to be even better partners to clients.
The second bucket is where technology is a disruptor, where it drives prices down, not up. It’s a race to the bottom. Cheapest vendor wins.
There’s no glamour in the second bucket. The VP from my agency that had to take a Ryanair flight to a client meeting can tell you so.
That’s the place that advertising holding companies are in and desperate to get out of.
But to do so, it’s not only about acquiring the tools. We need a better story to tell clients.
And that’s the future John Wren has seen. A future where Omnicom is repositioned in the minds of clients. That’s the promise land.
But it’s not that easy.
Integration of big companies is though. Change management is hard tedious work. Mckinsey say that 70% of them fail.
And there might be too muscle memory and sacred cows in our industry to realise the efficiencies the merger PowerPoint decks are telling.
Most likely, the biggest value the merger will create will be this nice transformation story Omnicom can tell clients.
This merger keeps Omnicom in the news cycle in the next year or so. It’s a good story to tell clients and be in top of their minds for a while.
Who knows if the integration will generate the savings and synergies management says in the next five years.
Five years is too long anyway for an industry that needs to show growth now.
It’s too long to change the minds of clients on what we can actually do for their business today.
But in the end, that’s what this merger is all about. It’s not about cost cutting, it’s about changing perceptions now. It’s about storytelling.