Omnicom Acquires IPG for Consolidated Scale, Data Integration, and Efficiency

Key Quotes

"Redundancies have been identified primarily based on where we brought organizations together and duplication and management and quite a bit of layering that existed in each and the groups is being removed. So if we stay pretty true to the best person for a competitive job, it doesn't matter whether you came from IPG or Omnicom, the best person is selected. The number in retail evidence that we've eliminated, I think, a number of back office or primarily administrative work management type of jobs, which like cutting out these layers, we're doing it and the closing of certain offices which were really unnecessary and unprofitable and getting more efficient in a local market. Right now, the numbers look to be around 4,000 folks, which is a lot of people's lives and and and we're terribly sensitive to it, but when you look at the combined populations of the organizations prior to the merger, it's it's a very low single digit type of efficiency."

John Wren explains that the redundancies and layoffs are a result of consolidating duplicated management roles and administrative functions after the merger. Wren emphasizes that the selection process for remaining positions is based on merit, regardless of whether the individual came from Omnicom or IPG, aiming for increased efficiency within the combined organization.

"So what's interesting is they speak very differently to investors than they do to journalists about this topic. I think it's pretty clear if you've been listening in on their analyst calls that this is a big focus for them, principal buying, because the margins are good and quite frankly, clients are asking for it. When you ask them about it though, they get a little bit prickly and they were kind of, you know, I think there's like a narrative in the marketplace that Omnicom and Publicis and all these agencies are only growing because of principal buying. So they were saying that's not true, that's not the only way we're going to be growing, but it is one tool in our toolkit and, you know, our job is to help clients find efficiencies and that's one highly, highly requested way that we do it."

The speaker notes a discrepancy in how Omnicom discusses principal-based buying, being more open about its focus on margins and client requests when speaking to investors. However, when speaking to journalists, Omnicom executives tend to downplay its significance, framing it as just one tool among many for driving client efficiencies, possibly to counter a market narrative.

"Yeah, so basically they are they are pulling Acxiom's Real ID, I think it's called, into Omni, and they're kind of renaming it Omni Plus as like a revamped version of it. Omni is the operating system, workflow, media buying platform that Omnicom uses, and now they're essentially bringing underpinning that with Acxiom's identifier and basically have claimed to have merged all of Omnicom and all of IPG's proprietary data together, underpinned it into this Real ID, and that's going to inform everything through the Omni Plus workflow from planning to strategy to creative media, et cetera, et cetera."

The speaker explains Omnicom's data strategy post-merger, which involves integrating Acxiom's Real ID into their Omni platform, rebranding it as Omni Plus. This new platform aims to unify all proprietary data from both Omnicom and IPG to inform all aspects of their operations, from planning to creative media.

"It is at this point, right? Like like, I mean, not just but even with the media strategy there, it's just like, let's just glom everything together. We'll have a giant media buying apparatus. Let's just glom everything together here. We have a giant data identity commerce practice. Yeah, and in scale, we have power. Yeah, that is the play. And I asked them like, because the world has changed, right? Like holding companies used to be all about scale. That's why that's why they bought up all these agencies and were very siloed organizations because it was just about having more and more and more agencies under your umbrella."

The speaker identifies the core strategy of the merged Omnicom as achieving scale across media buying, data, and commerce practices. This approach, while rooted in the traditional holding company model of accumulating agencies, is now focused on consolidating capabilities to gain power, even as the broader industry landscape shifts towards interconnectedness and automation.

"So for instance, you'd run a a media mix model and you'd create an econometric model that would take into account a bunch of different assumptions and you'd make claims about what caused what and how much is attributed to radio versus television. But that's pretty unsatisfying in the sense that it's very much just dependent on the assumptions you supply in the beginning and it's not available for months and months and months after the campaign. So if your goal is to live in a world where you can kind of optimize the campaign while it's still happening, you need ongoing measurement."

Brian Leach explains that traditional media mix models and econometric analyses are often unsatisfactory for brand marketers because they rely heavily on initial assumptions and provide results long after a campaign has ended. Leach emphasizes that to optimize campaigns in real-time, ongoing measurement is essential.

"So what you want to do is set the promotion in a way that takes into account the baseline propensity that Ryan has to buy a product and stretches Ryan beyond that baseline propensity. And then to measure that, you really need to look at a population of people who are not exposed to that promotion, who are matched to a population that are, so you can really isolate that variable during the same time period and know that in fact there's a lot of sales occurring that would not have occurred otherwise."

Brian Leach highlights the importance of measuring incremental sales by comparing a group exposed to a promotion with a matched group that was not. Leach explains that this method allows marketers to determine if a promotion is driving new sales that would not have happened otherwise, rather than simply subsidizing purchases that would have occurred naturally.