Omnicom/IPG merger: why didn’t Interpublic actually work?
IPG (Interpublic as it mostly was) reports its Q4 and full year 2024 earnings tomorrow, which will be closely analysed, not least by Omnicom shareholders who were expecting to pay between $13-14bn in shares for the rival group.
IPG is currently valued at $8bn following a number of account reverses. It has also disclosed in filings about the merger with Omnicom that it expects 2025 revenue to decline by a chunky 3.7%, from $9.2bn to $8.86bn. Omnicom CEO John Wren, the architect of the merger along with IPG CEO Philippe Krakowsky (both below, Wren left) may be asking himself how much IPG is worth now. Especially as the merger premium, which now looks generous, may be the main support for IPG shares.
Takeovers, which this is in effect, usually include a premium although $8bn to $13bn looks generous. There may well be a re-negotiation before the deal closes in the second half of this year. One of the consequences of the merger is expected to be further job losses – both Omnicom and IPG have been quietly shipping out staff over the past year – as the merged entity seeks $750m in annual cost savings.
Trouble is, the people you lose may be the ones you want to keep as clients react adversely to their trusted teams being reduced or leaving in their entirety. In the UK there have recently been some high level departures from IPG agencies McCann and MullenLowe, the latest being ML CCO Nicky Bullard, an experienced agency manager as well as CCO.
Such people are expensive, of course, but hard to replace. There must be a doubt over whether MullenLowe will continue as a separate creative network under Omnicom Advertising Group. It doesn’t seem very keen on replacing departing senior staff. ML chairman Tom Knox is dealing with business in his customary elegant way – he’s seen a number of upheavals since his agency DLKW was acquired by IPG to revive what was then Lowe Group, two wholly dissimilar agencies. Nobody on this side of the pond had a clue what Mullen was when IPG merged it with Lowe.
That, maybe, has been IPG’s besetting fault. The first ad holding company, formed out of McCann-Erickson by Marion Harper nearly 70 years ago, the chemistry has often seemed to misfire. Frank Lowe’s Lowe Group, once one of the world’s premier creative agencies, was bought for big bucks but the relationship foundered when Lowe’s bid to run IPG came to nought. Other agencies to wither away included Draft, merged into IPG’s FCB, and Ammirati Puris Lintas, dumped into Lowe. Lintas was once Unilever’s in-house agency and Unilever remains, probably, MullenLowe’s biggest international account.
It’s to be hoped that Omnicom’s John Wren shows a surer touch with the many further in-company mergers and so-called rationalisations that surely await him (to be fair, Omnicom has a much better record in such matters.) And media and tech play a far bigger part in Omnicom and IPG’s thinking now anyway.
But it’s a pretty grim outlook for many in this planned mega-merger and, down the line, for the big ad holding companies as a group. Publicis Groupe CEO Arthur Sadoun might well demur – but that’s another story.
