IPG holds it together as protracted merger with Omnicom draws closer
IPG is pretty much holding it together as it waits to complete its merger with Omnicom, reporting a 3.5% decline in organic growth in Q2 – not great but in line with forecasts – as account losses Pfizer creative, Lego and Amazon media kick in.
The company has won business from Paramount/CBS, AI company Anthropic and 7-Eleven plus renewed Merck business. IPG shares rose slightly valuing it at $9bn, roughly in line with expectations when the merger (takeover in reality) with Omnicom was first announced. The deal will make it the biggest ad holding company by revenue although Publicis will likely remain the biggest by market cap, currently $25bn.
Waiting for such a protracted merger to complete – with all the attendant redundancies – must be a hellish business for employees and some senior IPG execs have already voted with their feet. McCann London, for example, lost its CEO and newly-appointed CCO. IPG has also been laying off people from its Acxiom data business.
CEO Philippe Krakowsky (above) says: “Organic revenue was in line with expectations, reflecting the impact of account activity in 2024. Underlying growth in the quarter showed sequential improvement against those headwinds, with strong performance at our media and healthcare practice areas. We also saw growth in our sports marketing and public relations disciplines. Our adjusted Q2 margin was very strong due to significant progress on our program of strategic transformation, as well as the benefit of improving operating performance at our two largest units.
“Given our first-half results, client activity that remains largely resilient in the face of macro uncertainty, and the work we are doing to further develop our portfolio in growth areas such as media trading, commerce and data-driven marketing, we remain on track against the full year target for an organic net revenue decrease of 1 to 2%. At this level, we expect to drive adjusted 2025 EBITA margin significantly ahead of the 16.6% we had previously shared, reflecting both structural and operating improvement.
“Looking ahead to our combination with Omnicom, we remain on track to see the transaction completed in the second half of this year. The level of interest and support from clients continues to be strong, and there is enthusiasm on the part of practitioners across both organizations to unlock the value that the combination will create. By bringing together our deep pools of talent, complementary capabilities, and geographic strengths, we can create an organization with unmatched ability to deliver business outcomes for marketers in every industry sector, around the world.”
Enthusiasm across both organisations might not be the description that springs to mind for many of those affected. What sort of company will Omnicom/IPG be and what will it include? IPG’s media operation (strongest in the US) will surely merge with Omnicom’s and Acxiom will find a place somewhere in Omnicom’s Omni.
Creative, as ever these days in holding companies, will see the biggest changes. Advertisers still want and need creative even in the burgeoning AI era, although not necessarily from the big traditional networks. The holding companies (with the exception of Publicis) just aren’t very good at making money from it. Will the likes of IPG’s McCann (once the world’s biggest creative netework), FCB and MullenLowe find a home alongside Omnicom’s BBDO, DDB and TBWA or will there be sales or a merger-driven bonfire of the brands, as at rival WPP?
Rivals Publicis and Accenture Song will be watching how this unfolds keenly. With WPP well and truly in play after its recent profit warning further holding company consolidation must be on the cards.
