Omnicom Group (OMG) are going to acquire Interpublic Group (IPG) creating the largest advertising agency network globally. This combined entity would likely surpass WPP in scale, and catch up closer to Publicis.
A merger with Omnicom would bring agencies such as TBWA, McCann, DDB, OMD, BBDO, Fleishman Hillard, FCB, Weber Shandwick, OPG, Mediabrands, Mullen Lowe under one roof.
OMG marquee clients include Disney, Amazon, AT&T and PepsiCo. For IPG they include Johnson & Johnson, Netflix, Mattel, L’Oréal, J+J, Geico. IPG recently lost major creative accounts, including General Motors and Amazon and is selling RGA and Huge.
According to the acquisition announcement: “the company will deliver end-to-end services across media, precision marketing, CRM, data, digital commerce, advertising, healthcare, public relations and branding”.
The context for the acquisition through retail media lens
Omnicom acquired Flywheel last year for $835 million, in its biggest acquisition ever. Flywheel has an amalgam of digital commerce and retail media agencies and platforms under its umbrella, with a deep domain knowledge of Amazon, Walmart, Alibaba, and other retail media networks.
Flywheel brought a scaled capability to Omnicom in the fastest-growing part of the advertising industry. Omnicom Chief Executive John Wren said: “When I sent my three top technology guys down to take a look at [Flywheel], they basically said, ‘You can’t replicate what they’ve done. It will take you as much money and at least five years,’ and that’s if the world sits still, which the world’s not about to do.”
Omnicom created an entirely new business to sit horizontally across the business. In other words, the Flywheel expertise is being driven right across the business – a business that has usually been structured vertically.
IPG made an acquisition a few years ago of Acxiom who provide ‘data, identity, and analytics solutions for customer acquisition, retention and growth.’ It took the Acxiom business and created the IPG OPEN architecture approach. This means they are bringing the capabilities ‘across over 74 agencies with Acxiom’s Customer Intelligence Cloud capabilities to help brands and people win.’
IPG have a data ‘story’ that they are rolling out across all of their roster. OMG have a digital commerce and retail media story that is rolling out across all of their businesses.
Combining the two businesses of OMG and IPG is no mean feat – but the combination of an excellent data and digital commerce and retail media ‘story’ will be powerful.
The combined group will be bigger than Publicis – one of the other advertising holding companies. Publicis has a good track record of transformational acquisitions over the years, for example, digital shelf capabilities (Profitero), data (Epsilon) retail media tools (Citrus), digital marketing and tech (Sapient, Digitas, Razorfish over the years). They have done it again with the recently announced acquisition of Mars United Commerce for $600m.
For anybody who has been observing the world of digital commerce and retail media over the last few years, this acquisition is proof that this industry is hot and at the centre of everyone’s attention.
What does the future hold?
As media industry legend Nick Manning wrote “Digital commerce is much further-reaching in that it has implications across the entire marketing spectrum, embracing brand, product, distribution, fulfilment, CRM, search, social, analytics, influencer and media.”
Manning describes the outcome of all of this as follows: ‘We are witnessing the full-scale emergence of a new way to drive business and new marketing models, and this will have a profound influence on the marketing services industry and thus the agency world.’
Another London media expert, Pete Robins, Founder of Project 5 media, a new agency focused on the nexus of data, digital commerce and retail media believes that “It became clear a while back is agile media deployment based on tech and maths, and therefore increasingly AI, would bring competitive advantage. What we’re seeing now are newer businesses emerge with some new skills to do that but also positively the major players making big step changes too. Clout is no longer about your size it’s about your power to do smart media”.
Scale once mattered in media buying, but what matters today is understanding audiences, how to use data, how to use retail media to create your own flywheel of success and combining of these together. These skills are rare and valuable – and, as shown by the acquisition, come at a premium.
