Credit: Ivan Pergasi via Unsplash
IPG has taken a shot at the rest of the industry following claims the global advertising group will be distracted as it gets taken over by Omnicom.’
Omnicom's takeover of IPG will create the world's biggest advertising player. The marriage of rivals brings together the world’s third biggest advertising group, Omnicom, with the fourth, IPG, to form a company with 100,000 people and revenue of $25.6 billion (net revenue of $20 billion), with 57% of that in the US.
“A number of our competitors are clearly concerned enough about the combination,” Philippe Krakowsky told analysts in a briefing.
“They have spent a lot of airtime talking about our being distracted.
“But our frontline talent is fully focused on clients, which is obviously as it should be, and we have a small and clearly defined group here at corporate that will be working on the day-to-day activities required for a successful integration.”
He didn’t name Publicis Groupe whose CEO Arthur Sadoun sees the merger of Omnicom and IPG as a positive, resulting in their leadership being distracted as focus turns internal.
IPG is facing strong headwinds to growth from some big client losses.
Net revenue fell 1.8% to $2.4 billion in the December quarter. For the full year organic growth was just 0.2%, returning $9.2 billion. The company forecasts a fall of 1% to 2% in full year revenue for 2025.
“We are on the wrong side of the outcome in defending a number of very significant media accounts,” said Krakowsky.
The big reason for the losses: The decisive factor was principal media and the commercial terms enabled by that.
IPG calculates its growth will drag by 4.5 to 5 percentage points from just three of the largest losses.
Quarterly revenue phasing will be significantly more challenged in the first half of the year, with a net impact of wins and losses easing in the year's second half.
“It is important to highlight that our proposed combination with Omnicom will position us with greatly strengthened solutions for more competitive and better client outcomes,” said Krakowsky.
IPG has also spoken with its biggest clients.
“They see the benefits and understand that our partnerships and the value we can deliver for them will be meaningfully enhanced,” he said.
“So while we understand that our competitors are trying to disrupt what we are looking to build, it bears repeating that the integration will remain very focused and not get in the way of the services we deliver to clients every day.”
The company is also restructuring, seeking savings of $US250 million. This will be separate from the $US750 million in synergies from the merging of Omnicom and IPG.
“With an eye on the rapid evolution of our industry and its impact on our business, over the course of the back half of last year, we undertook a wide-ranging strategic analysis that included multiple avenues to rethinking our operating structure,” said Krakowsky.
“This strategic review has been focused on maximizing opportunities as an independent IPG, but these efforts will also clearly benefit us when it comes to the combination of our company into Omnicom.
“Our outlook for 2025, therefore, includes programming of restructuring over the course of the year designed to transform our business, enhance our offerings and drive significant structural expense savings."
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