Omnicom and IPG: The biggest merger in advertising, but does bigger always mean better?

The advertising world is buzzing with news of Omnicom’s proposed $13.25 billion all-stock acquisition of Interpublic Group (IPG).

A move that would create the largest ad holding company in the world, surpassing WPP. For decades, scale was king in this industry, but today’s question is more nuanced: Does this merger create value, or is it a high-stakes bet on an outdated playbook?

Let’s break it down.

The Strategic Rationale: Size, Synergies, and the AI Arms Race

Combining Omnicom and IPG means combined revenues north of $25 billion, bringing unparalleled scale. But scale alone no longer wins deals in a world dominated by Big Tech, AI, and data-driven marketing.

The real value here isn’t just being the biggest but being the smartest. Both companies have invested heavily in AI and data. Together, they could create a powerhouse capable of delivering deeply personalised, end-to-end client solutions. That’s the promise.

The challenge? Making these investments work as one cohesive engine - quickly.

Cost synergies of $750 million are a strong selling point, but the actual value lies in revenue synergies. Think:

• Integrated offerings. Bundling creative, media, and data in a way competitors can’t replicate.
• Client retention. Using enhanced data capabilities to deepen relationships with top accounts.
• Market share growth. Expanding dominance in programmatic, performance marketing, and underpenetrated regions.

But it gets tricky here: talking about synergies is easy; executing them is hard.

Valuation: A Premium Worth Paying?

The deal comes with a 21.6% premium on IPG’s share price, signalling confidence from Omnicom’s board.

On paper, it’s fair - both companies’ P/E multiples hover around 14x, in line with industry averages. But markets are sceptical, as Omnicom’s stock dipped 4% post-announcement. Why? Investors see risk, not just opportunity.

A proper valuation analysis must address the following:

• DCF assumptions. Are the $750 million cost savings realistic, or are integration costs underestimated?
• Revenue projections. Do combined capabilities justify sustained growth above market trends?
• Regulatory risks. Could antitrust roadblocks force divestitures that erode the deal’s strategic benefits?

This premium only works if the combined entity delivers measurable value quickly. Otherwise, it risks being seen as a bloated giant in an industry where agility now trumps size.

The Risks No One’s Talking About

Beyond the financials, the challenges of this merger are steep:

1. Client conflicts. Both companies serve competing clients - think Coke vs. Pepsi, P&G vs. Unilever. How will they avoid losing accounts during the merger?
2. Cultural integration. Combining two massive organisations with distinct cultures is no small feat. Talent loss and operational friction are very real risks.
3. Big Tech competition. Google, Meta, and Amazon aren’t waiting. They’re using their data and reach to continue eating the ad industry’s lunch. A combined Omnicom-IPG must innovate faster, or it risks being left behind.

My Perspective: Where Value Is Won (or Lost)

Here’s the bigger picture. This deal isn’t just about cost savings or size. It’s about redefining what it means to lead in a fragmented, tech-driven market.

The winners in advertising’s next chapter will:

• Use AI and data not just as buzzwords but as tools for delivering actual client outcomes
• Be client-centric, leveraging scale without sacrificing agility.
• Innovate at the pace of their competitors in Big Tech, not just their peers in holding companies.

Omnicom and IPG have the raw materials to succeed, but success will come down to execution.

1. Can they integrate without losing momentum?
2. Can they prove to clients and shareholders that this merger is more than a consolidation of the past?

The Takeaway

This merger is a bold move.

It could define the future of advertising - or expose the limits of traditional M&A in a changing market.

As the dust settles, the real test won’t be how big Omnicom-IPG becomes but how well it delivers measurable value. Because in today’s world, it’s not the most prominent companies that win - it’s the smartest ones.