The $13 billion Omnicom-IPG megamerger reflects a new era as Big Tech and AI upend the ad industry

• A $13.25 billion merger of Omnicom and Interpublic Group would create the largest ad-agency company.
• Industry insiders say the deal reflects an ad sector under threat from Big Tech and AI.
• A bigger company could have more leverage to make deals, but job cuts seem inevitable.

For ad-industry insiders, the US ad giant Omnicom’s proposed takeover of its rival Interpublic Group represents the consolidation of a challenged sector and shows that the future of advertising will be rooted in data and AI.

Being big matters as the industry wrestles with disruption from the might of Big Tech players and the advent of artificial intelligence. While AI could make offerings more efficient, it also threatens to displace many ad-agency services and affect the prices they can charge for them.

First reported on Sunday by The Wall Street Journal and confirmed by the companies on Monday, the agreement would create a company with combined revenue of more than $25 billion, based on last year’s figures. The $13.25 billion all-stock deal would merge Omnicom’s creative and media-buying agencies, such as BBDO and Omnicom Media Group, with IPG’s McCann Worldgroup and Mediabrands.

The combination would create an entity bigger than Publicis Groupe, which has the largest market capitalization in the sector. Analysts expect Publicis will end the year with the most revenue, too.

The French advertising company, the sector’s star performer, has outpaced rivals thanks to its simple messaging about an integrated set of services and as multibillion-dollar acquisitions in areas like data, IT systems, and commerce began to bear fruit. It also came out of the gate on AI, launching its internal Marcel platform in 2018, before generative-AI hype.

The combined company seeks to get an edge in AI, data, and media buying

Omnicom-IPG will be hoping to knock Publicis off the top spot — and not just on paper. By creating a larger company, Omnicom-IPG would have a bigger base to deploy data or technology like AI, which could give it leverage to secure beneficial and exclusive deals with partners such as cloud providers.

“Technology and data and thereby data-driven marketing has been arguably the largest driver of differentiation and growth for agencies for some time now, and one of the benefits of additional scale is being able to leverage major technology investments over a larger base of operations,” said Simon Nicholls, a partner at the advisory firm GP Bullhound, which works on mergers and acquisitions within the ad industry.

Some industry insiders say both Omnicom’s and IPG’s investments have lagged behind those of their competitors.

One rival minced no words.

“It’s a merger of two drunkards leaning against the lamppost as far as AI is concerned,” said Martin Sorrell, a former CEO of WPP who now leads the digital-marketing company S4 Capital.

The so-called IPG engine is powered by a nonexclusive partnership with Adobe GenStudio. Omnicom — whose Omni AI platform doesn’t lock clients into the Omnicom ecosystem — hasn’t offered as many specifics as its key rivals have about how much it’s investing in proprietary AI.

Still, the merger could benefit the pair in the future.

“This ushers in not just a new era of scale — it ushers in the opportunity to invest in where the marketplace is going, which is creative and tech powered by AI,” said Laura Desmond, an ad-industry veteran who now leads the martech company Smartly.

Scale is also crucial in media planning and buying, the profit centers of many agency businesses. Generally, the more client ad budgets you control, the more leverage you have as an agency when it comes to negotiating deals with media owners.

Being bigger is also particularly important in the lucrative but often controversial practice of principal-based media buying, where agencies buy ad inventory in advance and sell it back in packages to clients. It’s controversial because the agency doesn’t disclose the price at which it originally bought the media to the advertiser. Agencies have defended the practice, saying that it still drives performance for brands — and that brands themselves are often pushing agencies for lower ad prices. A larger advertising agency would have a bigger market of clients to resell its ad inventory back to.

An opportunistic deal in a turbulent market

Some of the rationale behind the deal is opportunistic.

IPG has been trailing behind its rivals recently, having lost key client accounts like Amazon’s media-buying business, General Motors, Pfizer, Microsoft, and Coca-Cola. Meanwhile, Omnicom’s stock is at an all-time high.

“Wren is a wily old fox; he’s no fool,” Sorrell said, referring to Omnicom CEO John Wren’s move to agree to the deal while Omnicom was on the upswing and IPG was floundering.

Omnicom said Wren would remain the company’s CEO after the deal closes. The acquisition, subject to regulatory and shareholder approvals, is expected to close in the second half of 2025.

What the deal means for ad-agency jobs

The consolidation of the two companies is likely to lead to large synergies — including job cuts. Omnicom said on Monday that the transaction was expected to generate $750 million in annual cost savings. The research firm Forrester said last year that the rise of automation could lead to the loss of more than 30,000 jobs within ad agencies by 2030.

Simon Francis, an ad-agency veteran who now leads Flock Associates, a marketing consultancy and recruitment firm, predicted that in the ad-agency sector, “there will be even fewer big roles and lots and lots of junior roles.”

“It will be harder to climb the career ladder,” Francis added. “Superstar creators and creatives will also be in demand, as well as good strategists, in all disciplines. But lots of other roles will become diminished.”

That could create opportunities for smaller agencies, especially as the merged company works its way through the disruption caused by integration, egos being knocked out of joint as roles combine, and client conflicts in which the new entity suddenly works with two or more fierce rivals in the same sector.

A proposed deal to merge Omnicom with Publicis Groupe a decade ago memorably fell apart after the pair couldn’t agree on which executives would hold key positions, including chief financial officer.

“The lessons learned a decade ago are not going to be repeated,” Wren said on a call with analysts on Monday morning.

Nimble independent agencies that aren’t encumbered by legacy businesses could offer good career opportunities for people who don’t want to deal with the complexity of a giant network. But industry insiders said it’s probably not a good idea to bet on companies in the middle of the pack, especially for those working in in-demand specialties like data, tech integration, and commerce media.

“For the average worker, it’s going to be all about scale,” said Greg Paull, a principal of the R3 marketing consultancy. “Unless you are in a creative boutique like Wieden+Kennedy or Mother, the world’s largest clients are going to seek out the world’s largest holding companies.”