Omnicom’s $30-billion power move: A new script for India’s ad industry

In a historic move that will reshape the global advertising landscape, Omnicom Group has agreed to acquire Interpublic Group (IPG) in a stock-for-stock transaction valued at over $30 billion. This deal dwarfs previous industry giants like WPP's acquisition of Young & Rubicam and Publicis Groupe's acquisition of Saatchi & Saatchi.

Omincom 's acquistion will create an advertising behemoth with a combined annual revenue of nearly $26 billion. The new entity will have a dominant presence across key markets, including India, where both companies have significant operations.

While the Indian advertising market is relatively smaller compared to global markets, it is one of the fastest-growing. With a burgeoning middle class and increasing digital penetration, India presents a lucrative opportunity for global advertising players.

According to GroupM's This Year Next Year (TYNY) report, India's ad revenue is expected to grow by 10.2% in 2024 to reach Rs 1,55,386 crore. This would make India the fastest-growing market.

The combined entity will be well-positioned to capitalize on this growth, leveraging its global expertise and resources to cater to the unique needs of Indian clients.

Impact on India’s advertising landscape & client portfolios

Interestingly, many in the industry are already speculating whether IPG's significant loss of Tata Motors (Passenger Vehicles) to Omnicom might not be such a setback after all. With the two companies set to merge, they’ll effectively become one big entity, sharing a combined client portfolio that covers a substantial market segment.

Surprisingly, even top officials from agencies in India were caught off guard by the development. They remarked, “It’s too early to understand what this means for the Indian market or how the client roster will be divided.” However, they expressed optimism about the potential for aggressive business opportunities stemming from the coming together of these two giants.

Aggressive business growth is precisely what the group is aiming for, as clearly outlined in their official statement.

“The combined company will bring together unmatched capabilities, including the industry’s deepest bench of marketing talent, and the broadest and most innovative services and products, underpinned by the most advanced sales and marketing platformTogether, Omnicom and Interpublic will be strongly positioned for continued growth in the new era of marketing,” said the official statement.

Coming back to the India market and where Omnicom Group and Interpublic Group (IPG) stand.

This acquisition positions Omnicom and IPG to dominate multiple sectors with an unrivaled client portfolio that spans industries such as automotive, technology, FMCG, finance, and luxury.

Omnicom's extensive portfolio includes three global advertising agency networks—BBDO, DDB, and TBWA—along with a global media network, Omnicom Media Group. On the other hand, with a global workforce exceeding 57,000 employees, IPG Mediabrands’s network includes UM, Initiative, Mediahub, Healix, KINESSO, MAGNA, Mediabrands Content Studio, Orion Holdings, Rapport, and The IPG Media Lab.

Some of Omnicom’s clientele in India includes the newly won account of Tata Motors Passenger vehicles, Omnicom's clients in India include, McDonald’s India North and East , Shriram Finance Limited, Chanel, Jaguar Land Rover, Sugar Cosmetics, Oppo, Royal Enfield, Brillon, Grupo Bimbo, Sandisk, Mehta Multispecialty, Groww, and others.
On the other hand, IPG over the years have also had a diverse clientele starting from the Indian National Congress to Bharat Petroleum Corporation (BPCL), Amazon, BMW India and others.

Financial performance of agencies

According to numbers accessed from the registrar of companies, Mediabrands India Private Limited for the financial year 31st March, earned a total revenue of Rs 7,95,577.65 (in thousands) compared to the total revenue of Rs 2,20,435.60 (in thousands) in previous year.

The profit before tax for the year under review stood at Rs 1,01,553.62/- (in thousands) as compared to the profit before tax of Rs 29,489.35/ -(in thousands) in the previous year.

While Omnicom is yet to submit their financials for FY 2024, the last available record of the Indian arm of the global marketing communication network said that Omnicom Group, has clocked a profit increase of more than 133 per cent over the previous four years.

As of December 2023, Omnicom Media Group India reported a standalone profit of Rs 43.7 crore, up from Rs 18.7 crore in December 2020, according to business research portal Tofler.

In December of last year, the company's standalone total sales increased to Rs 405.50 crore from Rs 165.83 crore in 2020.