Omnicom-IPG billings worth $2.7 billion in China: Ebiquity

Omnicom and Interpublic Group (IPG) announced last week that they're entering into a historic merger. This transformative alliance unites the third- and sixth-ranked global agency groups, establishing a market leader with a commanding 15.5% share of the global market—overtaking WPP and Publicis Groupe. Beyond cementing its global dominance, this merger carries profound implications for mainland China’s advertising ecosystem, where Omnicom inches closer to bridging long-standing gaps with its regional competitors.

Despite remaining third in the mainland China market, the new Omnicom Group has reported a significant increase in media billings, rising to RMB 19.6 billion (approximately USD$2.7 billion). This narrowing of the gap with Publicis Media and the widening of its lead over Guangdong Advertising Corp highlight the merger’s potential to disrupt long-standing market dynamics. Ebiquity, a global marketing and media consultancy, has noted that such consolidations often bring both opportunities and challenges, particularly in complex markets like China.

The merger reflects a broader trend of consolidation among global agencies, driven by the need for operational efficiency and broader client offerings. According to COMvergence’s 2023 analysis, OMG and IPG had previously held global market shares of 9.6% and 5.9%, respectively. Post-merger, the combined entity surpasses WPP Group (14.8%) and Publicis Groupe (11.5%) to claim a 15.5% share, solidifying its position as the world’s largest advertising group.

In mainland China, Omnicom Group’s 2023 media billing of RMB 16.84 billion ($2.3 billion) accounted for a 3.4% market share, placing it third. Interpublic Group’s RMB 2.76 billion ($380 million) represented a 0.6% share, ranking it eleventh. Post-merger, the new Omnicom Group’s combined media business procurement reached RMB 19.6 billion ($2.7 billion), reducing its gap with second-ranked Publicis Media to 2.6 percentage points (equivalent to RMB 13.2 billion or $1.8 billion) while widening its lead over Guangdong Advertising Corp (GIMC) to 0.6 percentage points (RMB 2.29 billion or $310 million).

Ebiquity’s analysis of the COMvergence New Business Barometer for the first three quarters of 2024 further highlights the shifting dynamics. Publicis Group led with a net business gain of RMB 6.73 billion ($930 million), securing high-profile clients such as Yum! Brands, Dyson, and Xiaomi, while losing Shanghai General Motors after a 20-year relationship. Prior to the merger, OMG ranked second with a net business gain of RMB 1.356 billion ($190 million), gaining significant clients including Universal Beijing Resort and China UnionPay. However, IPG’s Mediabrands faced losses of RMB 665 million ($91 million), including the departure of Lego and Universal Beijing Resort. Notably, Dentsu Media secured wins such as Pernod Ricard and Legoland, offsetting its losses slightly. Despite these fluctuations, the post-merger Omnicom Group reported a net gain of RMB 691 million ($96 million), continuing to hold second place.

Meanwhile, WPP’s GroupM and Dentsu Media saw significant losses, with GroupM experiencing a record net loss of RMB 3.936 billion ($545 million) and Dentsu Media losing RMB 2.165 billion ($300 million). The performance of Dentsu Media reflects the challenges of balancing client gains and losses, mainly from clients such as Nestlé/Wyeth/Totole and Bosch.

Looking ahead, Ebiquity predicts continued narrowing of the media billing gap between GroupM and Publicis. In 2023, the gap was 39% (RMB 21 billion or $2.9 billion); by 2024, it is expected to shrink to 21% (RMB 10.3 billion or $1.4 billion). Such shifts could disrupt the competitive landscape in China, where local agencies and digital platforms increasingly challenge global players.

While the merger has reshaped global rankings, its implications for advertisers are complex. Consolidation may lead to more streamlined service offerings but also raises concerns about conflicts of interest within agency groups. Advertisers are encouraged to carefully monitor how competing brands are managed within the same agency, explore specialised services offered by local agencies, negotiate media price reductions to optimise costs, and remain focused on adopting faster and more innovative media solutions to enhance marketing effectiveness.