The Omnicom-IPG Acquisition Looks Like a Good Bet. Here’s Why It May Also Be a Risky One

Omnicom’s Monday announcement of its plans to acquire Interpublic Group became the latest tremor in the already shaky ground of the agency world. If the deal goes through, it’ll create the largest ad shop in the world and one that, to quote the joint press release, will “bring together the industry’s deepest bench of marketing talent and the broadest and most innovative services and products, driven by the most advanced sales and marketing platform.”

Such optimistic rhetoric drove IPG’s share price up by 10% following Monday’s announcement. But partly because the deal would reduce advertising’s Big Four (WPP, Publicis, Omnicom, and IPG) to just three. But it faces a host of operational and organizational challenges—to say nothing of the regulatory ones.

Big merger, long process

Internally, the biggest hurdle is how to put these two colossal companies together. Beyond realizing the $750 million in “annual cost synergies” promised by the official statement, the new entity needs to “create long-term value beyond cost-cutting measures—a baseline expectation of a merger of this scale,” said Tammy Madsen, Professor at the Leavey School of Business at Santa Clara University.

“The size and complexity of the integration could take significant time, allowing tech leaders such as Google and Amazon to extend their leads in leveraging AI for personalized data-driven marketing,” Madsen added.

What’s more, the difficulty of “aligning processes, technologies, and cultures could slow down execution, distracting from innovation and customer service,” she said. “In an industry that demands agility, this is a significant risk.”

Another risk is shedding creative talent—intentionally or not.

“From an organizational perspective, you’re talking about aligning workforces, systems, and corporate cultures and rationalizing office space, which requires careful planning and clear communication to minimize disruption, said Tom Allen, chief education officer and head of content for the Zurich-based Institute for Mergers, Acquisitions & Alliances.

“Cost savings of $750 million might sound attractive,” Allen continued, “but if that involves large-scale job cuts, it could impact morale and create operational challenges. Retaining top talent and ensuring clients feel secure during the transition will be critical to keeping everything on track.”

A case of conflict avoidance

Then there’s the issue of potential client conflicts—meaning, the risk of competing brands that had contracted these two agencies separately only to find themselves under the same umbrella after the merger.

Neither Omnicom chief Wren nor IPG CEO Philippe Krakowsky expressed concern about that issue when talking with analysts.

Even so, said Georgetown University marketing professor Charles J. Skuba, “The biggest brands out there are going to be quite demanding on conflicts. The larger the client, the more demanding they will be.”

What will the Attorney General say?

Of course, all these operational hurdles may be moot if the proposed merger fails to get the approval it needs from federal regulatory officials. And how likely is that? Opinions are divided.

“Bringing together the third- and fourth-largest advertising buyers will inevitably raise questions about market dominance, especially with projected revenues exceeding $25 billion,” Allen ventured.

Wren shrugged off the possibility of a regulatory kibosh—at least while talking to analysts. “The world isn’t divided into four companies,” he said. “You have things like Google, Facebook, Amazon… servicing people’s marketing needs.”

As ADWEEK reported Monday, Wren also expressed the hope that the incoming Trump administration will be “more friendly to business.”

Well, maybe. The president-elect plans to put forward Gail Slater as his pick for assistant attorney general for the Justice Department’s antitrust division, and her record touches both sides of the political divide. Slater has worked as general counsel for the pro-tech-lobbying group Internet Association, which has taken a strong anti-regulatory stance. Slater has also served as economic advisor for J.D. Vance, who recently declared via his X account that “it’s time to break Google up.”

“I actually don’t think this [merger] is going to be a problem from a regulatory point of view,” said Ivan Pollard, marketing and communications center leader for the Conference Board. “I know that will be a slightly radical point of view, and not everybody will say that. I feel that there’s still enough competition in the market [that] needs aggregated providers.”

“The timing of this merger is spot on,” said Tim Malefyt, who teaches marketing at Fordham University’s Gabelli School of Business. “The current administration has moved to block large mergers such as among airlines, but the Trump administration is much less likely to halt the merger.”

Malefyt recalled that while Omnicom tried to merge with Publicis in 2013 and failed, this new union has stronger market-based arguments.

“[It] would significantly reduce costs and increase the amount of data available, gain access to a larger more diverse audiences, create better-targeted campaigns, and better understand audience behavior across different platforms,” he said.