Mint Explainer | How Omnicom’s acquisition of IPG will change Indian advertising

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 deal?

Omnicom Group acquired IPG in a $13.5 billion deal this week. Both companies are listed on the New York Stock Exchange. Omnicom shareholders will own a little over 60% of the combined entity that will trade on the NYSE.

Together, this is now the world’s largest advertising agency business, with annual global revenue of over $25 billion. Last year, digital newbie Accenture Song surpassed all legacy media holding companies with annual revenue of $20 billion.

How big are these companies in India?

By most estimates, Omnicom and IPG together will be the second-largest media and ad agency network in India. London-based WPP is still the largest, with media agencies such as Oglivy and Burson and the GroupM network of agencies, which was rebranded to WPP Media this May.

IPG operates agency networks FCB, McCann, MullenLowe and IPG Mediabrands, while Omnicom runs two verticals—the Omnicom Media Group for media buying, planning and investment agencies and the Omnicom Advertising Group for the group’s creative agencies.

Omnicom Media Group reported annual revenue of about ₹800 crore in FY24, according to the company’s latest filings. GroupM India alone posted annual revenue of over ₹1,400 crore in FY22.

Why is this merger important?

The merger may change power equations among ad agency networks globally and in India. Firstly, as overlapping agencies come under the same roof, there may be job and role cuts, affecting advertising employees.

Secondly, these advertising holding companies are struggling to grow worldwide. Share prices of the top holding companies—IPG, Omnicom, Publicis, WPP, and Havas—have declined 20-60% in the past year. All of them operate significant networks of ad, media and PR agencies. Besides, Japan’s Dentsu has put its entire international business on sale.

All this is happening as technology companies snap at the heels of these legacy giants. Accenture’s Song division, launched in 2022, became the largest ad network last year. Companies dealing in generative AI and rapid shifts in media networks towards retail and AI tools are keeping these agencies’ value proposition unsteady.

What other challenges do agencies face in India?

There’s a major antitrust investigation. The Competition Commission of India is investigating an association of these ad agency networks and India’s Madison World for colluding to fix ad rates. The CCI searched the offices of these networks this year after it received a whistleblower complaint from Dentsu under its leniency programme.

The investigation is likely to drag on. Already, Publicis and Madison have challenged the way the CCI is conducting the probe.

Is this the biggest merger in the advertising business?

No, but this is the biggest ever acquisition of an advertising agency. The advertising industry is extremely prone to mergers and acquisitions.

In India, big holding companies routinely buy out smaller independent agencies. Among the largest such deals was GroupM’s 2018 acquisition of The Glitch and FCB’s 2023 purchase of digital agency Kinnect.

That year, two of the biggest global creative agencies—Wunderman Thompson and VML&YR—merged to form VML; six years earlier, VML and Y&R had merged to form that entity. All were owned by WPP.

There have been similar deals among rival media holding companies in major markets such as Thailand and France in the past 10 years.