Omnicom reportedly in advanced talks to acquire Interpublic Group

According to reports by The Wall Street Journal, Omnicom Group is in advanced discussions to acquire Interpublic Group, a move that would create the world’s largest advertising company. 

The transaction is reportedly an all-stock deal valuing Interpublic at between $13 billion and $14 billion, excluding debt. As of last Friday, Interpublic had a market valuation of nearly $11 billion. A combined Omnicom-Interpublic entity would generate net revenue exceeding $20 billion, based on 2023 figures, surpassing WPP’s $15.1 billion net revenue.

The merger would unite ad brands under a single umbrella, reflecting a decades-long consolidation trend in the advertising industry. Both Omnicom and Interpublic have played roles in creating campaigns, including Apple’s 'Think Different,' Mastercard’s 'Priceless,' and L’Oréal’s 'Because I’m Worth It.'

Omnicom, led by CEO John Wren, includes agencies such as BBDO, TBWA, FleishmanHillard, and Omnicom Media Group, serving clients like Disney, AT&T, and PepsiCo. Interpublic, headed by CEO Philippe Krakowsky, owns McCann Worldgroup, Weber Shandwick, FCB, and Mediabrands, with clients such as L’Oréal, Johnson & Johnson, and Geico.

The merger could position the companies to address the growing influence of technology, data, and artificial intelligence in the advertising sector. AI advancements, particularly generative AI, are reshaping how agencies operate, potentially reducing the demand for roles such as copywriters, graphic designers, and ad buyers. A 2022 Forrester report predicted that automation and AI could eliminate 33,000 agency jobs, nearly 8% of the workforce, by 2030.

Interpublic has faced challenges in recent years, losing accounts, including Pfizer, Verizon, Spotify, and Amazon’s ad-buying business. The company has sold off underperforming agencies and enlisted McKinsey to assist with restructuring and cost-cutting measures. Krakowsky has also explored selling parts of the company, holding discussions with private equity firms such as Apollo and KKR.

Omnicom has focused on smaller acquisitions and organic growth in technology offerings but signalled a shift earlier this year by acquiring e-commerce firm Flywheel for $835 million.

The potential deal would likely face government scrutiny due to its impact on the ad-buying market, where global spending is projected to exceed $1.03 trillion in 2024, according to GroupM. If finalised, the merger would represent the most significant consolidation in the advertising industry to date.