A Madison Avenue makeover: Omnicom’s $9 billion merger with IPG is complete

• Advertising giant Omnicom has completed its acquisition of Interpublic Group.
• The merger creates the largest advertising agency by revenue.
• Agency holding companies face challenges from emerging tech like AI and new competitors.

Madison Avenue's makeover is taking shape.

Omnicom officially completed its acquisition of Interpublic Group on Wednesday, in a $9 billion all-stock deal that creates the largest advertising agency holding company by revenue. The combined company will generate annual revenue exceeding $25 billion, Omnicom said.

The agency mega-merger, first announced in December, creates a portfolio that unites creative networks such as BBDO and McCann, media buying agencies including OMD and Initiative, and the Omni and Acxiom data platforms.

In a statement, Omnicom CEO John Wren, who will lead the merged company, said the acquisition marks a "defining moment for our company and our industry."

"With the completion of the deal, Omnicom is setting a new standard for modern marketing and sales leadership — creating stronger brands, delivering superior business outcomes, and driving sustainable growth," Wren said.

Omnicom said it will announce its full leadership team on December 1.

The deal reflects the changing fortunes of Madison Avenue. The holding company landscape, once referred to as the big six — Omnicom, IPG, WPP, Publicis Groupe, Dentsu, and Havas — has now become five.

One of the theories behind the deal is that being bigger is the best strategy. By merging, Omnicom-IPG can reduce operating costs by consolidating systems, while also leveraging its collective client ad spending from the world's biggest brands to negotiate better deals with media owners and tech platforms.

However, some industry insiders have said that the deal also highlights how the power of holding companies is being challenged by the emergence of new technologies and competitors. Technology such as generative AI has made it easier for marketers to in-house some of the work they used to outsource to agencies. Newer entrants to the space, including consulting firms, private equity-backed ad networks, and independent agencies, are all vying for marketers' budgets. Marketers, facing macroeconomic pressures such as tariffs and high interest rates, are pushing agencies to produce more work at the same or lower budgets.

"The industry in general is under attack because clients are finding more efficient ways to make content at scale," said Greg Paull, president of global growth at the media advisory firm MediaSense.

Even the sector's star performer, Publicis, buoyed by several significant new business wins in recent months, including Mars and Coca-Cola's North American media account, has seen its market value drop by around 19% year-to-date.

Omnicom's share price has also fallen sharply since the IPG deal was first announced late last year, causing the transaction to drop from an initial valuation of roughly $13 billion. Omnicom shareholders will own around 61% of the combined company, with Interpublic shareholders owning about 39%.

Agency layoffs have been a constant at companies across the advertising sector. Steve Boehler of the consulting firm Mercer Island Group expects the Omnicom merger will lead to 20,000 job cuts at the combined company, including the layoffs IPG has already made this year.

Industry analysts anticipate further ad agency consolidation in the coming months.

Japan-based Dentsu is restructuring its international business — everything outside Japan — which could include a potential sale. Speculation has swirled around the future of WPP amid a recent run of poor financial performance, with newly appointed CEO Cindy Rose tasked with bringing about a turnaround. Earlier this month, media reports suggested Havas was eyeing a bid for WPP. Havas CEO Yannick Bolloré later said in an internal memo, "We are not in discussions with WPP." Industry insiders and analysts have also predicted that advertising companies will continue to be a target for private-equity giants and consulting firms.

As Omnicom works through the intricacies of its merger to deliver the margins expected by investors, competitors could look to seize the opportunity.

"It'll look like an interesting time where there are fewer big holding company brands, leaving space in the market for PE-backed and large successful independents to continue to merge and do a better job of attacking that middle-market where there's so much business that isn't getting senior-level attention from the holding companies," Boehler said.