What the Omnicom-IPG deal means for workers across the global ad industry

Omnicom CEO John Wren and IPG Philippe Krakowsky announced on Monday the merger of their companies. Wren will continue to lead the new, larger Omnicom.

A coming mega-merger is set to make waves across the advertising world, especially among the millions of people employed by ad agencies globally.

On Monday, Omnicom announced a $13 billion agreement to acquire fellow US advertising agency business Interpublic Group. The deal would create the world’s largest advertising agency holding company.

Industry insiders shared their thoughts with B-17 on how the merger could impact individual workers at Omnicom and IPG, as well as in the industry at large. They said ad industry workers should expect disruption like job cuts and opportunistic rivals swooping in for concerned clients as the new Omnicom takes shape.

Prepare for job cuts

As with many horizontal mergers, job cuts seem inevitable.

Omnicom said Monday the transaction would “generate $750 million in annual cost synergies” as it consolidates its operations with IPG.

Steve Boehler, the founder of marketing and management consulting company Mercer Island Group, predicted in a LinkedIn post that “thousands” of people would lose their jobs.

Job security in the ad agency world has been increasingly hard to come by. Agencies often lay off entire teams when they lose a major client. US advertising, PR, and related services employment fell by 300 jobs to 522,900 in November, despite overall US employment rebounding, according to the Bureau of Labor Statistics.

AI could also negatively impact the advertising job market. The research firm Forrester said last year that the rise of automation could lead to the loss of 32,000 jobs within ad agencies by 2030, about 7.5% of the total worldwide agency workforce.

Expect short-term merger turbulence and questions from clients

Merging two companies with 100,000 people, dozens of different agency brands, and hundreds of offices across the globe will not be a simple task.

“It’s a massive integration risk,” said Martin Sorrell, the executive chair of rival agency S4 Capital, who led WPP for more than 30 years. Sorrell has been an active acquirer of businesses throughout his career.

The companies could also dispose of assets. IPG announced recently that it would sell its digital ad agency Huge to a private equity firm and had said earlier this year it was also looking to offload R/GA, the agency famed for its work for Nike. IPG said the companies would continue to act independently until the deal closes and that during that time they would continue advancing strategic plans that had previously been announced.

Some clients will also have questions, particularly if the combination means their agency is working for one of their direct rivals.

On a call with analysts on Monday, Omnicom CEO John Wren downplayed the threat of client conflicts.

“Are there clients that we have to sit in the coming weeks and months and assure them that we still love them quite as much as we did prior to this morning? Yes.” Wren said. “But clients are what drive us every morning when we wake up.”

Egos will be bruised

A proposed merger between Omnicom and Publicis Groupe memorably failed in 2014 after the two companies couldn’t agree on which executives should hold key positions, such as the CEO role.

John Wren and Publicis CEO Maurice Levy couldn’t find a way to combine their companies that both sides agreed on. The proposed Omnicom-Publicis deal fell apart in 2014.

While the Omnicom-IPG deal appears more straightforward, there will be some humbling as the company looks to reduce duplicative roles and some execs are looked over for the top roles.

On Monday’s call, Wren said he wasn’t worried about senior people looking to change their careers as a result of the merger.

If you’re in one of these roles, you are in demand

Omnicom and IPG executives on Monday talked up the potential for combining their technology platforms, the use of data and analytics, and disciplines like media trading and customer-relationship management.

“Superstar creators and creatives will also be in demand, as well as good strategists, in all disciplines,” said Simon Francis, CEO of marketing consultancy Flock Associates. “But, lots of other roles will become diminished.”

Jay Wilson, VP and analyst for the research company Gartner, said job candidates looking to strengthen their résumés should consider that high-performing brands are looking for strong performers in areas like business strategy, strategic thinking, and data analysis.

“Advertising and marketing workers certainly need to upskill on Gen-AI skills as well,” Wilson said.

Smaller independent agencies could benefit

As Omnicom and IPG work through the merger, there will be opportunities for rival agencies to pounce.

“Competitors will decide to target you and go through all your clients and your best staff, it’s inevitable,” a former Publicis Groupe exec said Monday. They spoke on the condition of anonymity to protect career prospects. Their identity is known to B-17.

Nimble independent agencies that aren’t encumbered with legacy businesses could offer good career opportunities for people who don’t want to deal with the complexity of a giant network.

“Certain people will make life or business-style decisions to say, ‘God, I don’t want to be in this oil tanker and I’d rather jump into a speed boat,'” said a former WPP veteran, who asked not to be named in order to protect their business relationships. Their identity is known to B-17.

With fewer big holding companies to choose between, consolidation could drive up prices for clients, which could also present more opportunities for smaller rivals to undercut the incumbents on fees, the WPP veteran added.