Why worry about AI replacing jobs when a megamerger might make them redundant?
Omnicom is confident that its planned IPG acquisition will lead to a projected $750 million in cost savings, CEO John Wren told investors during the holdco’s Q4 earnings on Tuesday.
But to do that, a lot of what he called “streamlining” will need to take place – which, more than likely, means layoffs.
While client-facing and revenue-generating employees will reportedly not be affected, those from regional locations and back-office positions (i.e., admin, operations, accounting, IT, legal and HR) might face the chopping block when the sale is set to go through in the second half of 2025.
Assessing who gets to stay will involve “selecting the best individuals across the organization, irrespective of their current affiliation,” said Wren.
By our powers combined
For those who will remain employed, Wren said he expects there to be “quite a bit of revenue upside” when Omnicom and IPG eventually join forces.
In particular, Wren cited Omnicom’s continued investment in AI technology. Its company-wide Omni platform can already connect data and services across its new Omnicom Production and Omnicom Advertising Groups, as well as the newly-acquired Flywheel.
Adding first-party data management capabilities from IPG’s Acxiom will allow the Omni platform to attract more ad spend and create value-based outcomes, leading to more efficient and measurable impact for its clients overall, Wren added.
Once Omnicom and IPG finally complete their fusion dance, the company will generate 85% of their combined revenue from their top 10 markets, with the rest coming from an additional 40 markets worldwide.
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So, how’s that dance going so far? The merger is well into the regulatory review process and shareholders will vote to officially approve the transaction on March 18, Wren shared. But beyond that, he couldn’t get too specific about how conversations are going or what kind of conversations are even allowed to happen yet.
“If you could see me, you’d see that I have a lawyer on my right shoulder, and he hasn’t left me since December 9th,” he told investors, referring to the date when the deal was first announced last year.
Omni-coming soon
Until the sale closes, Omnicom and IPG will continue to operate as independent businesses, which also means separate pitches to current and potential clients.
Meanwhile, Omnicom’s business is booming. Annual revenue grew year-over-year from $4.1 to $ 4.3 billion in Q4 and from $14.7 billion to $15.7 billion for the full year 2024, with an identical organic growth rate of 5.2% for both periods.
CFO Philip Angelastro attributed Omnicom’s success last year to its strong fourth quarter, particularly growth in precision marketing and in both media and advertising (which the company combines into one category).
Precision marketing in particular only makes up around 11% of Omnicom’s revenue, but also achieved the highest YoY growth rate out of any revenue source – roughly 34% for the last quarter and 23% for the full year, according to the investor presentation.
But things might slow down in 2025.
Omnicom projects organic growth of between 3.5% and 4.5% this year, a conservative (lowercase “c”) estimate in anticipation of the more capital-C Conservative political structure now controlling the US, currently Omnicom’s largest market.
