In an industry where mergers are happening faster than competitive speed stacking, generative AI has pushed advertising agencies to consolidate more.
Omnicom announced yesterday that it will buy rival Interpublic Group in a deal worth $13.25 billion. To put it simply for those outside of the marketing department, one of the largest ad agencies in the world will acquire one of the other largest ad agencies in the world to form…the largest advertising agency in the world.
- Omnicom’s customers include Apple, Chanel, and Disney, while Interpublic has big names like Mattel and Johnson & Johnson.
- Based on the merging companies’ 2023 revenues, this new mega-agency could generate an estimated $25 billion in revenue.
Less Mad Men, more Silicon Valley
Big Tech has been eating away at ad agencies’ market share. Companies like Google and Amazon have been able to work their way into marketing budgets thanks to their ability to offer pretty much every tool traditional firms have and popular platforms to use them on.
The “Big Four” traditional ad companies (Omnicom, Interpublic, WPP, and Publicis) made their first big pivot to digital ad agencies by buying up several smaller firms in an effort to beef up their offerings and expertise. However, with tech companies adding artificial intelligence to their arsenals, firms see only one way to succeed: pooling resources.
- Agencies are scrambling to be at the forefront of the AI boom to attract clients.
- Omnicom rolled its production operations and data technology suite (which houses its AI tools) into one department in June. It’s already using generative AI to make cars look realistic against different backgrounds and translate ads into other languages faster.
Looking ahead: This kind of merger would usually raise antitrust concerns, but Omnicom CEO John Wren—who would remain in the top exec role if the deal goes through—said he is hopeful that the incoming administration will be “more friendly to business” and let the two giant conglomerations conglomerate.—MM
