Omnicom: be careful what you wish for

Opinion

By absorbing Interpublic, Omnicom becomes the world’s biggest agency group but also its biggest target. In a market where scale forces prices down and clients have the upper hand, this acquisition won’t fix the problem. It accelerates it.

‘When the gods want to punish us, they send us what we desire.’

The old Italian proverb popularised by Oscar Wilde kept rattling around my head when Omnicom finally absorbed Interpublic. Philippe Krakowsky can tell himself and the market that this deal secures its future inside a larger ecosystem. He gets scale, safety and a $49m payout, plus a new role as joint chief operating officer alongside Omnicom’s existing COO, Daryl Simm.

But any Omnicom executive or employee that is licking their lips at the prospect of being (by far) the world’s largest advertising agency group should not assume scale guarantees success.

In fact, knocking out Interpublic as a major competitor is more likely to accelerate Omnicom’s decline.

Spot the difference

Markets grow when there is choice: meaningfully differentiated products and services.

The more unique your offer, the more you can get away with charging higher prices. Omnicom, WPP and Publicis Groupe know this better than anyone: they build brands (perceived differentiation) so clients can charge higher prices.

But look at Omnicom’s closure announcement; a tour de force of corporate sloganeering: “built for intelligent growth” … “reimagines how data, creativity and technology combine” … “setting a new standard for modern marketing”.

Compare that verbal sludge to Omnicom’s competitors. Better yet, play this fun game at the office Christmas party!

Which company says this about themselves (answers in the links):

(Annual Report 2024): “Our strategy aims to capture the opportunities offered by AI… and deliver faster growth, higher margins and improved cash generation.”

(”About Us”): “Our clients benefit from a borderless, seamless service that drives the alchemy of creativity and technology.”

(“Our vision”): “To be at the forefront of people-centred transformations that shape society.”

(’What we do’): “We use the power of creativity, media and entertainment to drive growth and change… through authentic messages and experiences.”

The only reasonable conclusion is that there is no plan. It’s a simple act of financialisiation that rewards shareholders (including Krakowsky) in the short-term.

But where does the money really come from for these payouts? Because it’s not from higher revenues or profits.

Don’t take my word for it; listen to someone who has made more money from corporate investing than almost anyone in history.

‘I hope it doesn’t work’

In a 1994 speech, Warren Buffett’s business partner Charlie Munger recounts Berkshire Hathaway’s ill-fated foray into textiles. A vendor pitched a new loom that would double productivity and save the mill a fortune.

Rather than jump for joy, Buffett warned: “I hope it doesn’t work. Because if it does, I’m going to close the mill.”

Because Buffett didn’t just look at the immediate impact of savings; his rivals would end up having the same technology and make similar savings.

And so the only advantage of having smaller costs is to cut prices and steal some market share. A short-term tactic.

The result? You spent a load of money on new technology to end up with even smaller profit margins, because only now the overall market is smaller.

You were better off cutting your losses and just shutting down the company.

Unless, of course, you’re only in the business of short-term tactics.

What makes ad-agency groups shrink

1. The work is commoditised

Media buying, retail media planning, social asset production, influencer work… these have become interchangeable services. That’s why procurement treats agencies as commodities.

“Creativity” is the one trump card that these companies have, and they play it so poorly that it’s almost, well, sort-of creative. Whether it’s unique talent, methodology, or heritage, the expression of human creativity is what can differentiate one company from another.

We understood this in previous decades. We had ‘showmanship’ as System1’s Orlando Wood reminds us (just a shame there wasn’t more show-woman-ship). We had creative icons: David Ogilvy, Howard Luck Gossage, John Hegarty: people who wrote books, put forward ideas, and were faces of the industry.

But now?

2. Technology accelerates the race to the bottom

All we hear about is agentic AI workflow tools. Automation platforms. Offshore creative factories. “Connected intelligence” suites.

The Future of Media London was a case in point: I heard dozens of mentions of “agentic AI” from holding-company agency executives. Fine abstract talk about how ‘enabling new forms of creativity’ and ‘freeing us up from low-level tasks’. But few actual examples.

Insisting you have “proprietary” tech solutions is as meaningful as using “proprietary” language on your website that is as bland as everyone else’s.

3. Advertiser clients aren’t stupid

If you are now “one integrated, streamlined group”, your biggest clients will expect (and insist) on lower blended rates, lower overheads, lower pass-through costs, and fewer duplicated roles.

Procurement will say: “If you’re telling investors you’ve saved money, give some of that money back to us.”

And the fastest way for Omnicom to steal market share in a commoditised industry is to cut prices. You drop your cost-per-head benchmark, underbid incumbents, and offer a cleaner blended rate using newly rationalised “hubs”.

So, instead of forming a protective shield, Omnicom’s greater scale now makes it a target.

Escape routes that still exist

But despite these large companies’ best efforts to become one, the agency sector doesn’t have to be one grey, monolithic blob.

The difference lies in one question: Can procurement benchmark your value?

If not, you have a path out. I can think of four:

1. Proprietary systems that are actually proprietary

Not rebranded dashboards. Real IP: unique datasets, forecasting models, measurement frameworks, decision-shaping tools.

2. Work clients cannot price-compare

Strategic, distinctive, uncomfortable creative work that can’t be lined up in a spreadsheet.

3. Moving upstream into transformation

Product, commerce, CX, organisational change: the work clients will pay consultants a premium to solve.

4. Focus, not generalisation

Specialism beats scale every time: retail media boutiques, CTV planners, attention-led creative, commerce design consultancies.

What this really means

In a commoditised market, cost-cutting doesn’t strengthen you. It speeds up the rate at which clients confiscate the value from your business.

Unless holding companies build something that procurement can’t immediately demand back—proprietary systems, distinctive thinking, transformational capability or sharp, defensible focus —they’ll remain stuck in a cost-cutting race to the bottom.

And by costs, let’s not forget, we mostly mean people. Cutting people.