It’s hard to believe that more than a month has already passed since the announced Omnicom acquisition of IPG.
Much has been written. Much of it likely accurate! And yet, there are important topics that have not been well covered, like “what does an Omnicom or IPG client do right now” and “what do I do now if I am an employee of either Holdco?
Let’s talk about those topics (and more)!
The Omnicom/IPG merger, whether approved or not, will disrupt Omnicom and IPG clients, agencies, and agency staff for months to come.
If approved, the ramifications could be severe.
A month ago I wrote on LinkedIn about the “good, bad and ugly” of the Omnicom/IPG hookup. Most of what I wrote didn’t fall in the “good” category. As a quick reminder, here’s that post:
THE GOOD, BAD & UGLY: Omnicom eats IPG...
THE GOOD:
Omnicom & IPG investors win. Omnicom and IPG investors get to eat one of the investors’ class favorite dishes for the holidays – layoffs.
(Okay, at least that’s good for somebody…)
THE BAD:
Much nonsense will be written about this merger, with topics like efficiencies and scale and data. The reality is that there will be far more losers than winners here:
– Clients lose choice
– Costs will rise
– Transparency doesn’t have a chance
– Many agencies will cease to exist
– Client businesses will be disrupted
THE UGLY:
The worst outcomes will be for:
– People (thousands) will lose their jobs
– Mid market & smaller clients lose choice, face higher pricing, worse service
That was my take in the first 24 hours after the announcement. With a month to stew on this, here are the realities I envision and recommendations for several important parties. First, the realities as I see them.
The Realities of the Omnicom acquisition of IPG
Layoffs: The history of recent large agency mergers suggests that we should expect 5-10% in staff reductions, translating to 7,000-13,000 layoffs or more. Omnicom’s $750 million annual cost-synergy target underscores the inevitability of job cuts. And I believe the $750 million number also likely under-estimates the amount of layoffs.
Thousands of layoffs would result in a lot of misery as mortgages still need to be paid, college savings need funding, and dinner needs to be on the table. And a frightening scenario given the number of candidates suddenly available for every industry job.
Omnicom/IPG agency consolidation uncertainty: With six media brands (OMD, PhD, Hearts & Sciences, UM, Initiative, Mediahub) and numerous creative agencies (BBDO, DDB, McCann, etc.), consolidations are inevitable. The same thing goes for PR and other specialty areas. This creates uncertainty about the survival of any specific Omnicom or IPG agency and many likely mergers and restructurings.
Omnicom/IPG agency staff disruption: Omnicom/IPG employees face months of distractions, impacting morale, productivity, and client support. Who makes the cut? Who gets let go? Who gets the best job? Whose agency even survives? This uncertainty could certainly impact client support by the Omnicom/IPG agencies.
Omnicom & IPG client concerns: Clients may face uncertainty over their agency’s future, leadership changes, and potential competitive conflicts within the expanded roster. A client’s agency brand may be merged with another agency brand, or the Holdco may simply sunset a client’s agency brand. Agency leadership may change. The team may change. A client may end up as a much smaller fish in a much bigger pond. The newly combined client roster may even include competitive conflicts that did not previously exist.
That’s a great deal of uncertainty.
Even if the merger collapses, the interim disruption will leave Omnicom, IPG, their clients, and employees in flux.
Recommendations: How to Proactively Manage the Uncertainty
The Omnicom/IPG merger will have a severe impact on Omnicom/IPG staff, agencies, and clients. There are actions clients, Omnicom/IPG staff and other agencies can take now to make the most of the likely industry upheaval and turn the lemons into something sweeter.
What can they do to better position themselves for success during this time of uncertainty?
Recommendations For Omnicom & IPG Clients
Assess your situation now! Some practical advice:
– Audit Contracts: review your MSA and SOWs for potential protections or gaps (ownership transfer, non-compete and termination without cause clauses)
– Assess Options: assess the capabilities of your other current non-Omnicom/IPG roster shops for potential help needed in a pinch
– Strengthen Communication: maintain regular “top to top” calls with your agency counterparts to stay as informed as possible
– Seek Expertise: seek the advice of independent experts
– Prepare for Change: If the risks are too high, consider initiating an agency review to safeguard your marketing efforts.
Recommendations For Omnicom & IPG Staff
– Excel at Work: Continue to do an excellent job on behalf of your client(s) and agency. This will best position you to survive the merger as well as have excellent references.
– Reconnect with Networks: Reconnect now with your network “just in case.” Most busy executives fail to stay current with their personal networks. Reengage now!
– Refresh Your Resume: Update your resume. Take the time to recall details of your major accomplishments. Make sure the resume tells a good story of your key roles, responsibilities, and successes.
– Enhance Visibility: Reengage now and stay active with social networks like LinkedIn. Highlight to the world how thoughtful and likeable you are.
Recommendations for Omnicom & IPG Agency Leaders
– Deliver Excellence: Do great work on behalf of your clients. This sounds obvious, but it is the best insurance you and your people have of coming out of the merger in good shape.
Recommendations for Non-Omnicom/IPG Agencies and their Leadership:
Rather than aggressively pursuing clients from Omnicom/IPG, take a strategic, supportive approach. While it certainly makes sense for a casual check-in with these Omnicom and IPG clients if you already have a relationship, we recommend that you do that in a casual, friendly manner. No hard sell. And there are several other strategies that can better position your agency to catch some potentially disgruntled Omnicom and IPG clients:
– Leverage PR: Get PR support now. Times of uncertainty are ideal times for earned media.
– Enhance Thought Leadership: Upgrade your thought leadership in ways that are helpful to prospects.
– Expand Digital Presence: Be easily findable. Increase your social media presence in thoughtful ways. Make sure your website is SEO and prospect-friendly meaning your agency is well positioned, and the site is content rich and easy to navigate.
The Time to Act is Now
Omnicom and IPG clients, agencies and agency staff have little control over whether the merger is approved.
However, whether you’re a client, an employee, or a competitor, waiting for the dust to settle isn’t a good option. Turn lemons into lemonade. Take actions as simple as reviewing your MSA or updating your resume, or as significant as kicking off an agency review. The key is to create a plan that works on your own terms and not wait to see the outcome of the merger.
Steve Boehler is a founder and partner at Mercer Island Group, is as much at home with marketers and their C-Suites as in an agency’s boardroom. With marketers, Mercer Island Group is a top 5 agency search consultancy covering all types of agency relationships (creative, media, web, PR, experiential) and assists marketers with marketing organization structure, workflow and critical skill development (briefing, creative evaluation & feedback, etc.). The company also supports leading and aspiring agencies with positioning, pitch and strategy training and pitch support. Steve has supported clients as diverse as Ulta Beauty, Microsoft, UScellular, Nintendo, Kaiser Permanente, Stop & Shop, Qualcomm, Brooks Running, and numerous others.
Mercer Island Group helps marketers and agencies succeed. Company leadership is as much at home with marketers and their C-Suites as in an agency’s boardroom. With marketers, Mercer Island Group is a top 5 agency search consultancy covering all types of agency relationships (creative, media, web, PR, experiential) and assists marketers with marketing organization structure, workflow and critical skill development (briefing, creative evaluation & feedback, etc.). The company also supports leading and aspiring agencies with positioning, pitch and strategy training and pitch support.
