‘Nonsense fed by competitors’: Omnicom shuts down talk of losing clients in IPG merger

“That’s just nonsense fed by my competitors to the trade rags: that I’m going to lose people, and I’m going to lose accounts. I'm going to lose this or that or the next thing. It’s not true,” he said.

Finance chief Philip Angelastro chimed in to add that the current economic uncertainty is making the likelihood of any major business review less likely: “It’s very disruptive for the client to make a change, and especially in this environment, you know, there will have to be some underlying strategic reasons why they would do that beyond the ones that had started that process already.”

For that reason, Wren said the new business pipeline seemed to be slowing for the remainder of the year: “I’m expecting it to not be as robust as it was, say, last year.”

According to COMvergence’s Global New Business Barometer, Omnicom landed $7.7bn in total new business value in 2024 after major wins including Amazon’s $1.2bn US account and Gap’s $600m media brief.

For the deal to go through, Omnicom needs to win regulatory approval in 18 jurisdictions, including the EU, UK and United States (where the Federal Trade Commission had made a second request for information on the deal).

Wren said to date it had secured five – most recently China as well as Colombia, Brazil, Saudi Arabia and Egypt – and added that he was “100% confident” the rest would follow for the deal to be completed by the second half of the year.

Tariffs loom

For the first quarter of 2025, Omnicom reported organic revenue growth of 3.4% year over year. Revenue was $3.69bn, just shy of the $3.72bn analysts had projected. However, it lowered the bottom end of its 2025 revenue growth forecast “given the uncertainty of the current environment.”

A strong performance for media and advertising (up 7.2%) and precision marketing (up 5.8%) was dragged down by PR (down 4.5%), healthcare (down 3.2%), experiential (down 1.5%), and branding and retail commerce (down 10%).

Merger talk aside, tariffs dominated analyst questions on how the group could be impacted over the coming year.

“There’s still confusion in the marketplace as we look at the next 90 days and how these tariffs are negotiated. It’s that uncertainty where we didn’t want to surprise anyone,” Wren said of the forecast. “It doesn’t reflect any specific client actions taken today.

He downplayed any change to client spend, echoing the Q1 updates from Havas and Publicis when he said that most are in a wait-and-see state. “Clients across industries are looking for more clarity. They want flexibility at this point in time. And you know, ultimately, they need to defend and grow their brands. So, you know, the type of marketing spend may change, but we’ve got a diverse portfolio. We can help them in many different ways,” he said.

54% of Omnicom’s business is in the US followed by Europe (16.2%) and APAC (11.3%).

Auto has been among the sectors hardest hit by the tariffs. Last year its media agency PHD retained Volkswagen, which totaled $2.6bn in billings for the group.

“We haven’t had any disasters specifically from clients,” Wren added. “As a good partner, if they have difficulty, we’ll work with them as best we can to help us all get through whatever the process is. So the good news is there’s none of those accounts are under threat because of multi-year contracts.”

The complex supply chains for CPG companies like Unilever and P&G mean that the sector is also under pressure from potential tariffs. They have spent the past few years in-housing various parts of the marketing mix, including media, production and creative. For that reason, they don’t make up a huge percentage of Omnicom’s business, which is why the CEO perhaps felt he could speculate on the difficulty they’re likely to face if import costs rise and they can’t easily claw back costs from elsewhere.

“CPG companies have probably taken the lead on in-housing, and they’re going to find themselves in a very uncomfortable position if they have to adjust how they deal with those in-housing efforts, as opposed to if they had a third party vendor, which would be easier to get concessions. But that’s all speculation.”

For Omnicom, in the event of a pause or cut to spending, the CFO said it would be “very active in taking the appropriate actions rather than crossing our fingers.”

What the analysts say

Jay Wilson, VP analyst in the Gartner Marketing Practice

Omnicom noted that clients are taking a wait-and-see approach to tariffs – that there have been no specific actions by clients to date related to advertising and media spend. This reflects what we’re hearing at Gartner – that CMOs are taking a cautious approach.

That said, although it was noted that the 90-day pause on most tariffs is giving clients time to plan for impacts, I didn’t hear much about how Omnicom is proactively working with clients to conduct scenario planning in this uncertain environment. CMOs should be gathering information, considering impacts and assessing options, and they should be turning to their agency partners to help with this.

A question was asked regarding concerns clients may defect as a result of the proposed merger, which was strongly dismissed by Omnicom. We’d agree that agency M&A activity at a hold co level is unlikely to significantly impact or create near-term dissatisfaction from existing clients.

What is more likely to impact review activity is the continued decrease and flatlining of marketing budgets, where we see continued pressure on agency fees, which are increasingly coming under the microscope of the CFO – CMOs are being tasked with justifying these investments, in part because of the perceived cost efficiencies and democratization of creative skills enabled by GenAI.

If the current macro environment continues to destabilize, the uncertainty and volatility that ensues will likely cause more examination of the value that agencies, particularly more expensive agencies, are delivering. That said, I’d definitely agree that a big agency review – a risky, time-intensive, and resource-sapping process – is likely not at the top of a CMO’s wish list for 2025.

More likely, agency cost optimization will likely take the form of moving high-cost, resource-intensive creative and content production at scale from name-brand agencies to scalable content production hubs – often offshore – and Omnicom noted they are seeing more activity in this area, noting it’s a fast-growing component of the solutions they provide to clients.