Omnicom agrees to acquire IPG and take the AI fight to Big Tech

Omnicom Group announced on Monday it would agree to acquire Interpublic Group, potentially creating the world’s largest advertising holding company by revenue. The move comes as agencies wrestle with Big Tech’s grip on ad budgets and data while facing a slew of self-serve AI tools threatening their service businesses. The deal is subject to shareholder and regulatory approvals.

“While we haven’t seen major shifts in the agency world due to AI, I think everyone knows it’s coming,” Ari Paparo, ad tech veteran and industry analyst, tells The Current.

The merger would likely make Omnicom large enough to surpass rivals WPP and Publicis. Omnicom and Interpublic are currently the third- and fourth-largest holding companies respectively, with storied agencies like BBDO, TBWA, FCB and McCann under their umbrellas.

During a conference call with analysts discussing the deal on Monday, Omnicom and IPG executives pointed to the growing need to invest in AI as one of the key considerations behind the merger.

“In the environment that we live in […] every company in our business needs to make investments in order to stay at the cutting edge. So as we join forces, those platforms have to be enhanced, built, kept on the bleeding and cutting edge of where technology is,” said John Wren, Omnicom Group’s CEO, during the call.

“If Interpublic is three-quarters our size, whereas yesterday, I had $1 to invest in those efforts, now I have $1.67 to invest in those efforts,” he added. “So it should make me more agile.”

This sentiment echoes worries that were apparent a decade ago, when Omnicom and Publicis tried but ultimately failed to merge in a bid to better compete with what at the time was the relatively nascent Big Tech ad giants.

Since then, Big Tech has siphoned ad dollars to the point where GroupM now predicts that 41% of global ad revenue will go to Google, Meta and Amazon next year.

The sudden popularity of AI, and the proliferation of self-serve tools catering to marketers’ needs, may well have convinced Omnicom and IPG leadership that investments in AI will be crucial to remain competitive.

“The threat of AI is part of the story. Agencies benefit from more scale to invest in resources, people and partnerships with providers of AI-based technologies,” says Brian Wieser, CEO and principal at Madison and Wall, a media and advertising advisory firm.

“Large brands probably will end up finding they have one fewer agency groups to consider when they look for agency partners, but on the other hand, their partners will be better positioned to invest in new opportunities for the future,” adds Wieser.

Beyond AI, moves by both Omnicom and IPG in the last year underline the growing importance for marketers of being able to tap in to large amounts of first-party data and commerce data. Omnicom closed its largest acquisition ever in January when it bought digital commerce firm Flywheel, and just last week IPG completed its own acquisition of e-commerce intelligence platform Intelligence Node.

“By integrating Acxiom’s identity graph and Flywheel’s transactional data and Omni and [inaudible]’s behavioral data and operating platforms, all driven by AI, the combined company will be able to create the most comprehensive and detailed view of a client's consumers,” said Philippe Krakowsky, Interpublic Group’s CEO, on the call.

“People from afar have been, I think, impressed with the performance of Publicis and what they've been able to do with Epsilon,” said Wren. “We certainly will be able to do that and more, with the combination of IPG assets with our assets.” Epsilon is Publicis’ data unit specializing in first-party data and retail media.

“This move allows us to take control of our own future, rather than wait for technology to impact it in ways that you can't anticipate today,” said Wren.