This Media Buying Briefing covers the latest in agency news and media buying for Digiday+ members and is distributed over email every Monday at 10 a.m. ET. More from the series →
What a month last week was, right? Omnicom’s proposed $30 billion stock acquisition of rival holding company Interpublic Group caught an entire industry by surprise when the news broke in a report in the Wall Street Journal on Sunday, Dec. 8, throwing the entire journalism world that covers media and advertising into paroxysms of endless coverage — despite the fact that this proposed mega-deal isn’t expected to close till Fall 2025.
So today’s briefing is an attempt to take the long view, both of what’s happened, and what may yet happen, positive or negative. What seems clear from the 10,000-foot point of view is that there are two general schools of thought around the acquisition, which would vault Omnicom to the No. 1 position among the holdcos, from its current perch at No. 3.
One holds that scale is imperative, and that Omnicom was practically forced to do this deal (and found the perfect holdco to buy, given IPG’s challenges of late) in order to persevere. And dominance in the U.S. market is essential to future success, given how well the U.S. has weathered economic fallout from the pandemic, and looks to become a more deregulated market with a new administration taking over the White House.
“It’s the ability to be the clear leader in U.S. media billings, plain and simple,” argued one executive with knowledge of IPG’s corporate moves. “Publicis has had a fantastic couple of years, WPP has been the longtime leader. Everybody’s done better than IPG, for a variety of reasons. But for similar reasons, anybody would want to have IPG’s strength in the U.S.”
The other mindset holds that Omnicom is chasing fool’s gold, because scale won’t matter in an era where AI and tech are the great equalizers. “The world they’re solving for is an old world,” quipped one senior agency exec outside both holding companies who spoke on condition of anonymity.
Whichever school of thought you subscribe to, let’s look at this deal from two other points of view: What happens if the deal goes through; and what happens if the deal craters. And since it’s culturally imperative that any union be given a mashup name, I’m going with the one I prefer — OmniPublic — rather than what was written more often than not last week — OmniPG.
What happens if the deal goes through
Most bets have Omnicom pulling off this acquisition, provided its share price stays healthy (it slid all week but was climbing back up by midday Friday). As one insider close to Omnicom CEO John Wren put it, “There is no way he’s going to fail a second time. This is a sure thing.” The insider is referring to the failed attempt to merge Omnicom with Publicis — proposed in 2013 and scuttled a year later.
OmniPublic will have to dig into the hard work of finding the savings it said will reach $750 million (although it will spend an expected $450 million on severance, which sounds like a lot of layoffs to most). Since Wren and IPG CEO Philippe Krakowsky have been discussing the deal for nearly a year, there are probably a lot of plans in place on where they will merge agency brands. Another Omnicom insider speculated that a good example might involve IPG’s Mediahub getting folded into Omnicom’s Hearts & Science, given both shops bring a tech-forward approach to servicing their clients.
Many stories in the last week have been written about the value of making Acxiom’s data available to Omnicom’s Omni platform and/or Flywheel, the commerce engine Omnicom purchased last year. As the first exec explained, Omnicom may be able to unlock a value in Acxiom that IPG couldn’t.
“IPG gave too much freedom to its agency leaders to decide what they would use and what they wouldn’t use, whereas I think in Omnicom, there will be a more central approach, which is to say, you will do this, or else you can leave,” said the exec. “It’s much more top down, and that’s something that is very suitable for making Acxiom successful.”
But before that can happen, pain will be felt across both holdcos. IPG lost Johnson & Johnson’s media business to WPP/GroupM, news of which broke last week but had been expected, according to one IPG insider — who added optimistically that Mediabrands will hold onto Kenvue’s media in the U.S., noting that it’s a larger piece of business than the rest of J&J. (Kenvue did switch its media in APAC in November from IPG to Publicis, according to reports.)
Two other factors will play out across the media agency landscape as this deal inches closer to closure. For one, it will likely set off an arms race of consolidation and M&A the likes of which we haven’t seen in this industry since the 1990s. “The other guys [rival holding companies] can’t just sit there and go, it’s too bad,” said the exec familiar with IPG’s moves. “They probably go shopping, and looking much harder at Dentsu or Havas, etc. I actually think that tier is going to be bought up.”
Finally, the use of principal media will increase, whether you’re for its use or against it. And its use will likely be a factor in the M&A surge — principal media works better with scale. Omnicom has wielded the use of principal media effectively, alongside Publicis, agree most analysts who cover the agency world. To apply that now to another $18-20 billion in buying clout that IPG brings to the table gives Omnicom leverage and revenue generating opportunity. But only for those clients who are OK with its use — and at least two sources reached for this story said some clients want nothing to do with it.
It’s a safe guess that OmniPublic will have run its planned use by its existing clientele.
What happens if the deal craters
Although this is a highly unlikely scenario — thanks to Wren’s legacy — it’s not impossible. Between the dozen or so markets globally in which the two companies operate that will need to approve the deal, there’s also the chance shareholders will revolt, especially if stock prices drop.
If that happens, according to the IPG insider, life will go on. “We’re operating as fully independent companies, competing against each other in the interim,” said the exec. “And so Plan B is to … operate as independent companies.”
Nevertheless, the potential for client unrest is certainly there, said Ryan Kangisser, chief strategy officer at media consultancy MediaSense. “If clients do look at their business and think there’s going to be uncertainty and there’s going to be disruption — whether that triggers or accelerates a need to review existing clients, or maybe they become less competitive in competitive processes — then that could certainly alert shareholders,” he explained. “But this being an acquisition, I would expect they’ve built in a lot of these scenarios already.”
And there could even be speed bumps with the much-vaunted union of Acxiom and Omni/Flywheel, given lingering lawsuits against Acxiom.
Either way…
Whether the deal consummates or not, rivals are licking their chops at the prospect of picking off any advertiser below the Fortune 100 from Omnicom or IPG, or any other merger of holdcos.
“Will a behemoth like this really find a better place in the marketplace than the two companies individually? I’m not so sure of that,” argued Mark Penn, CEO of Stagwell. “I’ve always felt that the ideal size in the marketing industry was really closer to the $5 or $6 billion level, and we’re $2.5 billion and growing.”
Added David Dweck, svp of paid media at indie Wpromote: “It does look like [OmniPublic] is going to devalue talent strategy and onshore execution, and those are all things that we take clients away from holding companies because of it,” said Dweck. “It’ll make things a lot muddier between them, WPP and Publicis, and create opportunities for us. There are clients on their end who don’t want to do principal-based buying because of the nature of how it operates — and need faster, go-to-market strategies and a better execution team.”
Color by numbers
The IAB last week released its Insights Engine report on video creative personalization in digital video campaigns, which aims to show adoption among media buyers, brands and agencies. Some highlights:
- 61% of respondents report significant ROI from video creative personalization.
- 51% cited increased engagement as the top benefit.
- Nearly 30% allocate over half their budgets to personalization efforts.
- Top priorities for solutions are quality of creative output (60%) and ease of use (44%).
- Challenges include cost (39%) and lack of technical expertise (32%).
Takeoff & landing
- Horizon Media launched One Horizon, a full-service agency to get into the creative game while folding in tech, data and media expertise. It will be overseen by Roberto Alcazar, who currently heads Horizon’s multicultural agency 305 Worldwide.
- Independent digital agency Mod Op bought experiential shop Image Media to get into the experiential and events space. Founded in 1986, Image Media counts Johnson & Johnson, Marriott, Heineken, and PwC among its clients.
- Personnel news: EssenceMediacom’s longtime global CEO Nick Lawson announced last week he is stepping down … Assembly hired Wayne Blodwell to be its global svp of programmatic … Tinuiti hired Daniele Renda as evp, managing director, enterprise, coming over from Brainlabs; and Michael Martinez as svp, strategic planning, who comes over from Starcom … MediaPlus hired Stefanie Flaum as vp, group media director in its New York office, coming over from EssenceMediacom … Attention firm Amplified Intelligence named Anneliese Urquhart to be its new CEO, taking over from founder Karen Nelson-Field, who will focus on new business development.
Direct quote
“I hope you are enjoying being the top dog … In the next two years, Omnicom and IPG will consolidate more of the same to become the largest holding company — the top dog. We, on the other hand, will continue to create a category of one, by further expanding, differentiating and innovating to uniquely partner with our clients in their transformation. It’s not exactly like David and Goliath …”
— Publicis Groupe CEO Arthur Sadoun, in a video he posted to social media in response to Omnicom’s proposed purchase of IPG.
Speed reading
- Krystal Scanlon checked in on X’s latest attempt to win back advertisers by showing (self-reported) stats on video growth on the platform.
- Julia Tabisz generated original Digiday research showing how agencies are ready to move on from third-party cookies, but brands are dragging their feet.
- Antoinette Siu looked at Spotify’s efforts to woo more creators with video content, and how those efforts aren’t paying off yet.
