Industry leaders have expressed sympathy with the thousands of advertising executives who may lose their job in the wake of Omnicom’s creative network consolidation. Some believe the consolidation should serve as a wake up call for agencies in Australia, and others believe that the creative crunch is only the beginning with some form of media agency consolidation likely to occur down the track.
Today, Omnicom revealed that it will merge all creative agency services into three networks: BBDO Worldwide, TBWA\Worldwide and McCann Worldgroup. This means it will be sunsetting DDB, FCB and MullenLowe.
In Australia, DDB is joining Clemenger BBDO, while in New Zealand DDB and FCB will form McCann—check out the full repercussions here.
Industry leaders’ views are targeted towards Omnicom’s motives in acquiring Interpublic and consolidating creative agency brands.
‘A clear inflection point’
Julia Vargiu, a director at SI global, offers merger and acquisition advice to advertising agencies.
“My heart is with the thousands of talented people waking up today to the news that their agency no longer exists. DDB, FCB, MullenLowe – these are not just names on a masthead. They are creative homes built over decades,” she said.
“Retiring them is not reinvention. It is restructuring. A $9 billion deal with $750 million in projected cost synergies tells you everything you need to know. This is about survival, not growth.”
Vargiu believes the advertising industry is at a clear inflection point and holding groups are consolidating because their margins depend on it.
“Meanwhile, global buyers are shifting toward digital-first, AI-literate and founder-led specialist firms – not because they are big, but because they are focused. The market is polarising. You are either consolidating or you are becoming more valuable,” she said.
“For Australian agency founders, this is not just global noise. It is a wake-up call. The opportunity is not just to survive, but to become the clear alternative.”
Alex Radford, co-founder and partner of D3, said that the Omnicom-IPG consolidation confirms that the “global holding company model has shifted from creative engineering to financial engineering”.
“Retiring iconic legacy cultures like DDB and FCB, alongside 4,000 job cuts, is a heavy blow to the industry’s talent pool. But for clients, it signals something more critical: a massive distraction that will inevitably dilute creative quality and speed. You cannot cut that deep or merge cultures that are that distinct without severing the relationships and local nuance that actually drive results,” he said.
“For New Zealand, this merger widens the gap between global processes and local reality. It creates a ‘vanilla-isation’ of the market – less choice, less competition, and generic templates replacing bespoke thinking.”
Mat Baxter, founder and CEO of Skingraphica and the former global CEO of Initiative, questioned the leaders’ rationale behind the acquisition in the first place, arguing that consolidation is purely about efficiency rather than growth.
“The acquisition is really a response to the fact that neither company has been able to grow its top line. Bringing them together is aimed at shoring up the bottom line, and when revenue isn’t moving, the only way to do that is by cutting costs, tightening the back office and removing overlapping roles and expenses,” he said.
“It’s an accounting play rather than a product strategy. And in my view, it’s another short term fix that buys a couple more years of cost cutting to meet quarterly targets, but still avoids dealing with the deeper issues that caused the problem in the first place.”
Squad M&A chief executive Virginia Hyland is in no doubt that the Omnicom and IPG combination will “reshape the global advertising landscape” but care needs to be taken to get more than 100,000 staff on board with the changes.
“Greater buying power and deeper capability pools will give clients access to scale they’ve never had before, but the real test will be maintaining intimacy, agility and senior visibility as thousands of people, systems and cultures are brought together. When agency leadership becomes further removed from day-to-day client relationships, trust can erode quickly,” she said.
“The success of this merger will depend on how deliberately the combined group protects creativity, empowers local markets and ensures clients still feel like they matter in a significantly bigger pond.”
She said leaders will need to carefully communicate a new vision and the inevitable staff redundancies.
“It demands cultural clarity, a shared purpose and an operating model that marries global consistency with local autonomy,” she said. “If the newly formed group can articulate a simple, inspiring narrative and back it with transparent communication, integrated capabilities and undeniable client outcomes, it has the potential to become one of the most influential forces our industry has seen. But without intentional leadership and a client-first integration strategy, size alone won’t guarantee success — connection will.”
Is media next?
Several industry leaders predicts consolidation may eventually occur to the media agency side of the business, where most of the money is made.
One senior advertising executive, who spoke to B&T on the condition of anonymity, said: “Creative is the easy shit. The big calls are, what the fuck do we do with all the media agency brands? And that’s a really complicated bowl of spaghetti to sort of unravel; they’ll be madly working away on that.”
“This is like a small thunderstorm to be followed by a monsoon. People forget how big the media side of the business has become; it’s where the money is made.”
TrinityP3 global chairman and CEO is not so sure that Omnicom will make too many changes to the media side of the business.
“My understanding is that they’re looking to consolidate as much as possible, and most of these brands will become just front doors to manage conflict,” he said. “And when you think about it, in this day and age, media, particularly with things like principal trading, is still the big cash cow for the holding companies. So why would you take a potential risk?”
Woolley believes that more job cuts across Omnicom are inevitable for the group to meet its $750 million cost out target.
“IPG was able to make significant cuts in the last few months, but Omnicom couldn’t, because they couldn’t disrupt the acquisition process until it was actually finalised. Now Omnicom is able to start making these cuts.
“Anyone that’s still there shows that they’ve been at least considered to bring significant value to the business,” Woolley said.
“[Omnicom Oceania CEO] Nick Garrett needs to focus on the quality of the people that are fronting these agencies, because if the back end is largely consolidated and is going to be largely commoditised.
“So the differentiation is going to be the quality of the people at the front of an agency that represent those agency brands that have survived.”
Opportunities for others
Other industry leaders believe that the Omnicom acquisition creates opportunities for independent agencies and others.
“I don’t believe any of OMG or IPG clients have asked for this change. The real risk is how many will look elsewhere. They appointed the agency for a set of reasons, and if their criteria are no longer being met, they need to do what’s right for their business and rehome with an agency that does,” Simon Teagle, the CEO of IMANZ, said.
“Clients should be super critical of the changes agency management wishes to bestow on them. If they don’t perceive they will achieve better outcomes, clear differentiation from competitor brands that have joined their agency, or be paired with talent they can build strong relationships with, then that should be the catalyst for review.
“This merger brings uncertainty and stress for agency staff. But it brings massive opportunities for NZ advertisers to explore the many benefits that indie media agencies can offer their business. Now is the time to leave the global holdcos to do what they are now set up to do – be outposts that look after their global clients.”
Thompson Spencer group chief executive Melanie Spencer said that the retirement of brands like DDB and FCB marks the end of an era.
“These agencies have shaped our creative landscape for decades and their legacy deserves recognition,” she said.
“While major global brands absolutely need the reach and infrastructure of a large holding company, this moment also opens a huge opportunity for independent agencies. Talent is freer than ever to choose where they want to work and clients are increasingly willing to be braver, to rethink how creativity and media can show up, and to back independent partners who can adapt at pace.
“The landscape has changed. The future won’t just belong to the biggest, it will belong to those who can reinvent the fastest.”
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