Omnicom Group is in advanced negotiations to acquire direct U.S. rival Interpublic Group in a deal that could merge two Madison Avenue giants and fundamentally recalibrate the advertising industry as it grapples with the ongoing decline of many of its traditional practices.
Representatives for Omnicom and Interpublic did not respond to queries seeking comment.
Omnicom is known for its longstanding relationships with blue-chip marketers such as PepsiCo and Apple, and houses units such as BBDO, TBWA Worldwide and Omnicom Media Group.
Interpublic, meanwhile, has worked to build up new competencies in digital marketing and mining the consumer data that often comes with it.
In 2013, Omnicom and Publicis struck a deal to merge, but the agreement unraveled months later over disputes over which management group would oversee a combined entity.
According to a person familiar with the matter, the two businesses may declare as early as Monday that Omnicom intends to buy Interpublic in an all-stock transaction, which could value the latter at between $13 billion and $14 billion without debt.
Requests for comment from Omnicom and Interpublic representatives were not answered. The pact was previously covered by the Wall Street Journal.
The agreement will strengthen Omnicom’s position among a small group of powerful holding companies that control the market but have been having difficulty generating new revenue streams as the industry’s most well-known products, gaudy TV commercials and print advertisements, are perceived as less successful at influencing consumer behavior and purchases. With businesses like BBDO, TBWA Worldwide, and Omnicom Media Group, Omnicom is well-known for its enduring partnerships with major marketers like PepsiCo and Apple. Even though it hasn’t been perceived as breaking new ground in digital practices very often, it did close a deal in January to acquire Flywheel, a digital commerce expert.
While this is going on, Interpublic has been working to develop new skills in digital marketing and the mining of the consumer data that frequently goes along with it. Interpublic has been acquiring the majority of Acxiom Corp. while laying off some of its more established agencies, including Deutsch New York, Hill Holliday, and Huge, under CEO Philippe Krakowsky. and, more recently, purchasing retail data expert Intelligence Node in 2018.
In terms of customers, there might not be much overlap between the businesses. Coca-Cola and Amazon were once major clients of Interpublic, but many of their accounts have since moved to U.S. agencies. K. . advertising behemoth WPP, while earlier this year, Interpublic lost Amazon’s sizable media division to Omnicom and WPP.
In a research note released on Sunday, industry analyst Brian Wieser stated, “There is tremendous industrial logic to two large agency groups combining.”. According to him, “the removal of one significant globally capable agency group would help improve competitive dynamics in favor of all agencies when large clients seek to play agencies against each other in order to drive pricing for services down,” in addition to reducing back-office expenses. “.”.
Recently, Interpublic, Omnicom, and U.S. had the opportunity to collaborate with both companies. The K. Competitor WPP has agreed to buy a small stake in Mediaocean, an ad-tech company that assists agencies and advertisers in tracking invoices and payments for the media inventory they buy so they can run their ads.
Omnicom has previously looked into mergers. A merger agreement between Omnicom and Publicis was reached in 2013, but it fell through months later due to disagreements over which management team would be in charge of the merged company.
