Mint Explainer | How Omnicom’s acquisition of IPG will change Indian advertising
Two of the advertising world’s four largest conglomerates (Interpublic Group and Omnicom) officially merged this week. The combined entity, formed almost a year after Omnicom Group announced it would acquire IPG, is now the world’s largest media and advertising agency network, with global revenue exceeding $25 billion.
Why is this deal important and what will it change for India’s advertising industry? Mint explains.
What are the details of the Omnicom-IPG agreement?
Omnicom Group acquired IPG this week in a $13.5 billion deal. Both companies are traded on the New York Stock Exchange. Omnicom shareholders will own just over 60% of the combined entity. Trade on the NYSE.
Together, this is now the world’s largest advertising agency business with annual global revenues of over $25 billion. Last year, digital newcomer Accenture Song surpassed all legacy media holding companies with $20 billion in annual revenue.
How big are these companies in India?
By most estimates, Omnicom and IPG together will be the second largest media and advertising agency network in India. London-based WPP is still the largest, with media agencies including Oglivy and Burson and the GroupM agency network, which was rebranded as WPP Media this May.
IPG operates the FCB, McCann, MullenLowe and IPG Mediabrands agency networks, while Omnicom operates two verticals: Omnicom Media Group for its media buying, planning and investment agencies, and Omnicom Advertising Group for the group’s advertising agencies. creative agencies.
Omnicom Media Group reported annual revenue of approx. ₹800 crore in FY24, according to the company’s latest records. GroupM India announced a figure above its annual revenue alone ₹1,400 crore in FY22.
Why is this merger important?
The merger could change the power equations between advertising agency networks globally and in India. First of all, due to overlapping agencies being brought under the same roof, there may be job and role interruptions affecting advertising employees.
Second, these ad holding companies are struggling to expand globally. Share prices of the largest holding companies (IPG, Omnicom, Publicis, WPP and Havas) have fallen by 20-60% in the past year. All operate significant networks of advertising, media and public relations agencies. Additionally, Japan’s Dentsu has put its entire international business up for sale.
All of this is happening as tech companies go after these legacy giants. Accenture’s Song division, which launches in 2022, was last year’s largest advertising network. Rapid shifts towards retail and AI tools at companies and media networks involved in generative AI are keeping the value proposition of these agencies unstable.
What other challenges do agencies face in India?
There’s a major antitrust investigation. The Competition Commission of India is investigating a relationship between these advertising agency networks and Madison World in India on the grounds that they colluded to fix advertising rates. This year, CCI searched the offices of these networks after receiving a whistleblower complaint under Dentsu’s leniency program.
It is thought that the investigation will take longer. Publicis and Madison have already objected to the way CCI conducted the investigation.
Is this the biggest merger in the advertising industry?
No but this is the biggest purchase ever advertising agency. The advertising industry is extremely prone to mergers and acquisitions.
In India, large holding companies routinely acquire smaller independent agencies. The largest such deals included GroupM’s acquisition of The Glitch in 2018 and FCB’s acquisition of digital agency Kinnect in 2023.
That year, two of the largest global creative agencies, Wunderman Thompson and VML&YR, merged to form VML; Six years ago, VML and Y&R merged to form this entity. They all belonged to WPP.
Similar deals have been made between rival media holding companies in major markets such as Thailand and France over the past 10 years.
