“Two drunks leaning on a lamppost”: Sir Martin Sorrell on the Omnicom–IPG merger and the turbulence ahead
In a wide-ranging interview with Storyboard18, Sorrell delivers his frankest assessment yet of how the deal will redefine creativity, media, and talent across markets.
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As the dust settles on the Omnicom–IPG merger, the global advertising ecosystem is bracing for its aftershocks—ranging from leadership churn to widespread restructuring. Nobody is better positioned to interpret these shifts than Sir Martin Sorrell, Founder and Executive Chairman of S4 Capital. In a wide-ranging interview with Storyboard18, Sorrell delivers his frankest assessment yet of how the deal will redefine creativity, media, and talent across markets.
The industry sees consolidation as a reaction to market stress. How transformative is the Omnicom–IPG deal for global advertising?
Start with the basic structure of the industry. Of the six major holding companies, four are either flat or under significant pressure. Only two are genuinely growing. This is happening in a trillion-dollar market where the dynamics are split into two very different worlds.
Roughly $300 billion is traditional media, and that segment is shrinking. Free-to-air TV networks are down around 5% in ad revenue and as much as 10% without live sports. The remaining $700 billion is digital, which is growing at 10–20%, led by Google, Meta, Amazon, Alibaba, Tencent and TikTok.
Combined, global ad expenditure grows around 5–6%. Yet holding companies struggle because they’re still heavily tied to the shrinking traditional pool. For some groups, 40–50% of revenue still comes from traditional media or legacy creative structures. So the Omnicom–IPG merger is fundamentally a capacity-reduction move. The overcapacity isn’t in digital. It sits in the traditional, declining part of the industry. This deal shrinks that.
What kind of capacity reduction do you foresee?
When the deal was announced a year ago, Omnicom and IPG had 127,500 employees combined. IPG has already reduced headcount. Omnicom projected $750 million in efficiencies, equivalent to about 7,500 roles. I suspect combined headcount is already closer to 120,000. To reach their targets, they’ll need to come down to roughly 112,000 or even lower. This is a defensive merger, designed to reduce cost and scale down the legacy infrastructure.
Omnicom says the merger strengthens its data and media stack. Does that argument hold?
Scale is useful only in traditional media, because that’s where pricing leverage matters. In digital, it’s about brainpower, analytics and data science, not buying clout. They’ll argue that fusing Omni with Acxiom creates a stronger data backbone. But the core of this merger isn’t offensive. It’s a consolidation of the weak, not an acceleration of the strong.
You’ve called John Wren’s decision “strange.” Why?
The proxy filings reveal that IPG shared its projections with Omnicom — and clearly stated that 2024 revenues would fall 3.7%. Wren knew he was buying into decline. If he had waited for IPG’s quarterly numbers, the stock would have dropped and Omnicom could have paid far less — maybe one-quarter of the combined entity instead of one-third.
Why did he rush? Two possibilities: Fear of another buyer. But neither private equity nor Publicis was seriously interested. Concern about Omnicom’s own stagnation. Omnicom reports gross revenue, but net revenue is flat for three straight quarters. There’s also a personal angle: after decades in charge, he may want to go out on top — as the CEO of the largest group.
What happens to the combined brand architecture?
It’s incredibly complex — dozens of global brands, overlaps in creative, production, and media. Rationalisation is unavoidable. One difference worth noting: Wren has not destroyed creative brands the way WPP did with JWT, Y&R, Grey and others. He has gradually nudged them together under Omnicom Advertising Group. Now, with McCann, FCB, DDB, BBDO and TBWA in the mix, simplification becomes inevitable.
Eventually, the model will resemble Publicis: one company, one P&L, country-led structures, unified capabilities across creative, production, data and media. December 1 will tell us how aggressive they intend to be. But 2025 will be a year of upheaval, the first with a unified budget, and therefore guaranteed mayhem.
Are other holding groups facing similar stress?
Yes. Dentsu International is in deep trouble — the second worst performer after WPP. The Japanese domestic business is solid, but the international arm is structurally weak.
WPP, frankly, has passed the point of no return. It is vulnerable, may fall out of the FTSE 100 after 27 years, and yet there’s no activist investor, no PE fund, nobody willing to step in. McKinsey has been called in for a strategic review, but that only buys time.
If you look at the traditional part of the industry, capacity must shrink. IPG being absorbed is only the start. Something must happen to WPP and Dentsu International. Eventually, the landscape may look like this: Publicis, Omnicom, Havas. Dentsu as a domestic Japanese player. WPP possibly broken up. AI will accelerate all this by exposing the weaknesses of time-based legacy models.
How do leadership teams decide which agency brands survive or merge?
Usually, the weaker leadership teams get absorbed or dissolved. That’s the wrong way to do it. You should merge strong entities under strong leadership; that preserves value. When you collapse a business that is already struggling, you lose clients and talent — which deepens the decline.
In this case, it looks like DDB, BBDO, TBWA and McCann could be consolidated. If DDB had stronger leadership globally, the outcome might have been different. There will be heavy casualties.
India is a market where IPG has traditionally been strong. What should India expect?
Disruption. Clients worry when they see internal reorganisations. That triggers account reviews, even if no problem currently exists. If the India structure mirrors global strengths, IPG leaders should run the creative side and Omnicom should lead media. But until clarity emerges, agencies remain vulnerable.
Conflicts will be handled through structural insulation. Many clients today are more open to overlapping agency relationships, but some conflicts remain non-negotiable.
When do layoffs begin — December or over 6–12 months?
The clean-room planning has been underway for a year. Legally, they couldn’t integrate earlier, but they have been modelling options. So yes, expect a concrete plan on December 1. Job cuts are inevitable. Client churn is inevitable. Account reviews are inevitable. There is simply no way around it.
By 2030, what will define a successful holding company?
Two things: Top-line growth and profitability. Top-line growth will indicate whether the company has genuinely embraced future-facing capabilities — AI, digital engineering, new media, quantum, blockchain, and data-driven content. Profitability will reflect restructuring discipline.
One more point: Omnicom still refuses to publish net revenue. That is unwise. The market sees through it — their share price fell from $105 at the announcement to around $70.
Is the merger a reaction to AI automation and creative commoditisation?
No. Neither Omnicom nor IPG has strong AI solutions. No major client would describe them as leaders in AI. The merger isn’t about AI — it’s about surviving AI. AI compresses production time, improves personalisation, and automates planning and buying. You simply don’t need 127,500 people.
Could this merger be an offensive play to build proprietary tech and data assets?
It’s entirely defensive. IPG sold because its leadership didn’t see a future. Only three executives received golden parachutes — the ones who negotiated the deal. Omnicom’s motives were defensive as well, with perhaps a personal legacy dimension for Wren. He has been CEO since 1985. If he retires, he wants to retire as the head of the world’s largest group. The traditional part of the industry is under unprecedented pressure. These two companies are built on the old model. When a chill wind blows, people huddle together.
Or, as I sometimes put it, this merger is like two drunks propping each other up on a lamppost.
