Omnicom-IPG: Ad honchos see second gorilla for independent agencies to contend with

The Omnicom-IPG merger has sent shockwaves through markets worldwide. The union of these two titans promises unprecedented consolidation of creative, media, and data capabilities under one roof. For independent agencies in India, this merger represents a double-edged sword: a threat of overwhelming competition on one side and a realm of untapped opportunities on the other.

The question is: Can India’s agile, independent agencies turn this moment into an advantage? The answer lies in strategic pivots, innovative thinking, and a renewed focus on their strengths. This story explores how Indian independent agencies can rise to the challenge, the hurdles they must navigate, and why their resilience is vital for a thriving, competitive ecosystem that fosters creativity and innovation.

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Ashish Bhasin, Founder, the Bhasin Consulting Group, thinks that it will take some time for the whole merger to go through and for its impact to be felt in India. Oftentimes, he adds, the changes are not immediate; they happen over a period of time. As far as independent agencies are concerned, he says, “I think it was at Dentsu that we started the trend of using acquisitions in India as a strategy for inorganic growth. I carried out around 12 acquisitions over a period of about seven to eight years, and that spurred growth in the sector.”

“I think if there are good independent agencies, there will always be interest from holding companies to acquire them. As far as the business aspect is concerned, since there will be a larger, scaled-up player, particularly in the field of media, it will give them some advantage in terms of negotiations because more scale gives you more clout and, therefore, better negotiating ability. However, I do not think independent creative agencies will feel any major impact or pressure in the short term,” he adds.

Lloyd Mathias, marketing expert & investor, too, doesn’t think there’s a significant opportunity for Indian agencies, except for the potential client realignment resulting from the coming together of these two large groups: Omnicom and IPG. According to him, this realignment might occur because some clients may be concerned about conflicts of interest. However, he adds, large holding companies like WPP, Publicis, and others have handled competing brands by working with different agency brands within their networks. For instance, WPP’s holding company manages several brands like Ogilvy and, in the past, JWT, each working with different clients. “That being said, there could be a few clients who may reconsider their alignment with the IPG and Omnicom groups, which could present a small window of opportunity for some smaller Indian creative agencies,” Mathias adds.

“Independent agencies will possibly be gearing up to beef up their EBIDTAs, as sometime in the future one of the BIG Sharks will gobble them up. Either WPP, Dentsu, and now the new mammoth Omnicom-IPG Group,” points out Navroze D Dhondy, Founder & Managing Director, Creatigies Communications.

As large holding companies continue to consolidate – often shuttering some of the industry’s most iconic brands in the process – Anil Nair, Co-founder of Glassbox Ventures and Pollinate Labs, sees a silver lining for independent agencies. He believes this is an opportunity for them to showcase their strengths in commitment and personalization. Independent agencies can serve as a refreshing alternative to the platform-driven, tech-heavy, data-focused, AI-centric approach that holding companies are increasingly adopting.

Commenting in his capacity as an experienced CMO having led marketing across industries, columnist and commentator, Shubhranshu Singh, CMO, Tata Motors CV, emphasises the importance of a vibrant ecosystem with a big role for independent agencies.

Singh feels that there is a felt need for the presence of strong and independent agencies in the Indian advertising industry to drive innovation, creativity, and a competitive ecosystem. Smaller boutique agencies are more experimental and take bolder risks to make a mark. They are more agile and less bureaucratic, he adds.

“Young emerging talent, bringing fresh ideas and trends into storytelling, gets a better chance with such agencies. They are less vested in the status quo. As India is getting more prosperous, it’s celebrating its heterogeneous nature. Local languages and local contexts are important for audiences. Most crucially, creative freedom is a state of the mind. The independent agencies can offer cost-effective yet highly impactful campaigns, pushing the industry to balance quality with affordability,” says Shubhranshu Singh. 

According to him, independents prevent market monopolization and ensure a level playing field. “The MSME sector is almost exclusively reliant on smaller independents as the large networks may not cater to their needs as well. Their ability to adapt quickly, take risks, and deliver culturally relevant work makes them indispensable to the growth and evolution of the industry,” Singh concludes.

Douglas B Holt, a leading expert in cultural branding, emphasizes that iconic brands transcend traditional marketing by embedding themselves deeply within the cultural fabric of society.

In his seminal work, ‘How Brands Become Icons: The Principles of Cultural Branding’, Holt outlines how brands can achieve iconic status by addressing collective cultural anxieties and aspirations. Understanding and utilizing cultural symbols, rituals, and meanings enable brands to communicate effectively within the societal context, enhancing relevance and authenticity in alignment with societal transformations to maintain relevance.

Vivek Bhargava, Co-founder, consumr.ai, feels that the merger between Omnicom and IPG presents more opportunities than threats for Indian independent agencies. According to him, here’s how they can leverage this industry shift to their advantage:

Accelerated Acquisition Opportunities

As global competitors like WPP, Publicis, and Dentsu race to counterbalance the scale of this merger, they are likely to accelerate their acquisition strategies, especially in fast-growing markets like India. This creates a significant opportunity for independent agencies with strong digital, regional, or niche capabilities to position themselves as attractive targets for acquisition.

Talent Acquisition from Merger Fallout

Major mergers often lead to talent attrition and layoffs, as overlapping roles and cultural misfits emerge during integration. For Indian independent agencies, this churn offers an unparalleled opportunity to onboard experienced professionals, strengthen their teams, and expand their expertise across disciplines.

Adopting AI and Technology to Seize the Moment

The advertising industry is being rapidly disrupted by AI and technology-driven solutions. Independent agencies, with their flexibility and smaller scale, can seize this moment to acquire or partner with tech startups specializing in AI, martech, and data-driven tools. This will not only enhance their service offerings but also enable them to win over clients from the merged entity, which may face integration delays and conflicts.

Capitalizing on Client Conflicts and Integration Challenges

The merger will inevitably create client conflicts as competing brands within the combined portfolio seek alternative solutions. Independent agencies are well-positioned to step in, offering dedicated, conflict-free services. Additionally, the sheer complexity of integrating two massive networks will create operational inefficiencies, further opening doors for agile independents to attract dissatisfied clients.

Opportunities for Creative Agencies

Collaboration between creative teams from two distinct corporate cultures is often fraught with challenges. Independent creative agencies, known for their nimbleness and focus, can step up to offer specialized services, particularly in areas like regional storytelling, hyperlocal campaigns, and culturally nuanced narratives – crucial elements in the diverse Indian market.

Prolonged Disruption Creates a Window for Growth

A merger of this scale will take years to fully settle, creating a prolonged period of industry disruption. During this time, independent agencies can innovate, expand their offerings, and develop tailored solutions that align with market demands. Their ability to pivot quickly gives them a significant edge over a large, bureaucratic entity in transition.

“This merger reshapes the competitive landscape, but it also opens up new avenues for Indian independent agencies to thrive. By capitalizing on talent acquisition, technology adoption, client conflicts, and creative specialization, they can position themselves as indispensable players in a disrupted ecosystem. The key lies in agility, innovation, and the ability to provide personalized solutions in a market that values cultural relevance and speed,” says Bhargava.

The Challenges

What are the biggest challenges that independent agencies in India face in competing with the consolidated power of the merged Omnicom-IPG entity? How can they overcome these challenges and maintain their competitive edge?

Ashish Bhasin thinks that the biggest challenge that the advertising industry in general faces in India – not just independent agencies but the entire industry – is quality of talent and appropriate pricing. In some ways, he adds, it’s interrelated because agencies are not able to demand and get a fair price for the services they offer. Their profitability is often too low, and they are not able to pay top dollar to attract the best talent.

“Looking back over the last few decades, I think the quality of people coming into advertising today is not at par with the quality of people coming in two or three decades ago. There has definitely been a deterioration in that quality. The biggest challenge every agency will face, whether independent or part of a network, will be attracting and retaining top-notch talent,” he adds.

According to Bhasin, this will intensify even more for smaller agencies because there will now be another big player with deep pockets to attract talent. To prepare for this, independent agencies should:

1. Never sell themselves cheap: They must remain profitable and maintain good margins.
2. Attract and retain talent: Do everything possible to secure the best minds in the industry.

“Somehow, as agencies, we are very defensive about our profits. We almost feel guilty about making profits or even saying that we make profits. Agencies should be proud of being able to charge a premium for their services. If we ourselves don’t value our work and are unwilling to demand a fair price or premium for our services, no one else will,” asserts Bhasin.

Lloyd Mathias thinks that the main challenge for smaller Indian agencies lies in the advantages large global agencies have. For instance, these global agencies often secure clients through global alignments. If Ford in the US is aligned with Interpublic Group (IPG), the Ford India account will naturally follow suit, and so on. This global alignment gives them a significant edge.

Secondly, he adds, global agencies benefit from steep learning curves. They have access to extensive research, best-in-class learnings, and insights shared across their network, which smaller Indian agencies don’t typically have.

“Lastly, there’s the advantage of economies of scale. Global agencies, with their substantial buying power, can achieve significantly better deals and cost efficiencies, a benefit that smaller Indian agencies often struggle to match,” says Mathias.

If you are independent, you are supposed to be small and most importantly, nimble – something which these huge groups fail to provide, points out Navroze D Dhondy. “QRT (Quick Response Time) and walking on the edge will make independent agencies wanted by a certain breed of clients. The MNCs, in many ways, would toe the global partner line.”

Anil Nair predicts that further consolidation in the industry is inevitable, including what he describes as “consolidation of consolidations”. He emphasizes that independent agencies must double down on their core strengths: creativity, storytelling, customer-centricity, and a human-driven approach to brand building. By leveraging these qualities, independents can differentiate themselves and thrive in a changing landscape.

According to Vivek Bhargava, the merger creates a financial behemoth in the industry. With WPP already controlling a significant portion of the media landscape in India, this new entity introduces a second gorilla for independent agencies to contend with. However, he adds, independent agencies have unique opportunities to navigate these challenges and carve out their own space in the ecosystem.

Dwelling at length on the advantages of independents, Bhargava points out that independent agencies can focus on developing specialized capabilities in areas such as creative innovation, AI-driven marketing, and MarTech implementation. These niches not only offer a differentiated value proposition to clients but also position agencies as attractive acquisition targets for global players in the future.

“Collaboration among independent agencies can be a game-changing strategy. By pooling expertise and resources, smaller agencies can compete more effectively against the consolidated power of giants like WPP and the merged Omnicom-IPG entity. Joint ventures or partnerships with tech companies can also enhance their ability to deliver cutting-edge solutions,” he adds.

He further adds that independent agencies’ ability to pivot quickly and respond to market changes is a critical advantage. “While larger entities grapple with bureaucracy and slower decision-making, independents can execute campaigns with speed and efficiency, making them appealing to clients looking for flexibility and faster turnarounds. Major mergers often create disruption and client conflicts, as competing brands within the same portfolio may feel sidelined or deprioritized. Independent agencies can step in during this period of flux to win over dissatisfied clients by offering conflict-free, personalized attention and solutions tailored to their needs,” Bhargawa adds.

According to him, mergers of this scale often lead to talent churn, with employees either leaving due to cultural misalignment or being made redundant. Independent agencies can actively recruit these professionals, integrating seasoned talent into their teams to strengthen capabilities and offer enhanced services.

Vital catalysts

In an era of industry consolidation, strong independent agencies play a crucial role in keeping the Indian advertising ecosystem vibrant and dynamic. Their agility, creative freedom, and personalized approach fuel innovation and push creative boundaries. By offering fresh perspectives and challenging the status quo, they foster healthy competition, ensuring that creativity thrives and clients have diverse, high-quality options. Independent agencies act as vital catalysts for a more balanced, resilient, and forward-thinking industry.

Ashish Bhasin points out that a larger player with more resources can invest in better technology. Often, he adds, this technology is available within global agency networks and can be imported into India.

According to him, the presence of scale and investment power, if used appropriately, allows investment in cutting-edge technology, which is crucial with the rise of AI and other tech-related advancements.

“Strong independent agencies can foster innovation by focusing on technology and investing in high-quality talent. Bright minds lead to better ideas, which drive innovation. As far as competition is concerned, this industry has always thrived in a competitive environment. For over a century, advertising in India has coexisted, with multinationals holding significant market share. The industry is resilient and capable of maintaining a healthy level of competition without succumbing to unproductive rivalry,” says Bhasin.

Navroze D Dhondy believes that independent agencies will be and should be the cradle where raw young talent normally gets their first break; they become feeder-agencies to the Big Boys, who want readymade executives, planners, writers, creative staff. According to him, consolidation is the way the world is moving, and this Omnicom-IPG merger is no surprise.

“Finally it will boil down to a four-horse race, or may even whittle down to a two-horse race, where another round of mergers create monoliths of the communication world. I just hope that independent agencies see this as a really positive challenge and keep coming up despite this trend,” Dhondy says.

Lloyd Mathias believes having a strong bench of homegrown agencies is always advantageous. Firstly, they are much faster and more nimble in their operations. They don’t need to rely on global bosses for decision-making, which makes the process much more efficient. Secondly, they bring homegrown creativity to the table. Their deep understanding of the local creative environment is a significant strength and can lead to sharper, more relevant campaigns. Lastly, there’s a sizable number of Indian public sector undertakings (PSUs) that often prefer working with homegrown agencies. This preference provides another substantial advantage,” Mathias concludes.

“You need both ends of the agency spectrum to push one another to better the standard of creativity, craft, use-cases and technology frontiers. I believe that this consolidation, in-housing and rise of independents is a cyclical phenomenon and a part of an evolutionary process. Though at a personal level, I lament when some iconic agency brands are shut down by accountants in the blink of an eye without remorse or recourse,” concludes Anil Nair.

The Omnicom-IPG merger is a monumental shift that will shape the future of the global advertising landscape. While this consolidation presents challenges for Indian independent agencies – such as competition for talent, scale, and technological resources – it also opens doors for unique opportunities. The agility, creativity, and personalized approach of these independents position them as essential players in fostering innovation and maintaining a dynamic ecosystem.

Ultimately, the co-existence of large holding companies and strong independent agencies is crucial. This balance pushes the boundaries of creativity, promotes healthy competition, and ensures diverse solutions for clients. The future belongs to those who can leverage change, stay innovative, and hold steadfast to the essence of storytelling and human connection.

The golden age of large agency networks belongs to the past, opines Vivek Bhargava. In earlier times, he adds, having a massive team and widespread physical presence was a competitive advantage. Today, in the AI-driven age, it is possible to deliver exceptional service to large clients with far fewer people.

This shift, he feels, inherently gives independent agencies a significant competitive advantage over larger advertising conglomerates. Previously, he says, independent agencies struggled to compete with larger groups due to the need for a physical presence in multiple cities and the reliance on on-site client interactions. However, the rise of platforms like Zoom and the normalization of remote work post-COVID have leveled the playing field.

“For instance, Consumr.ai, a boutique SaaS platform, now collaborates with multiple Fortune 100 clients – a scenario that would have been almost impossible pre-pandemic. India has also become home to niche creative agencies that have achieved global recognition. Take the example of Web Chutney, which was awarded the best creative agency in the world at Cannes Lions a few years ago. Such a milestone was unimaginable for an Indian agency not too long ago. This demonstrates that boutique agencies are not only thriving but setting new benchmarks globally. Moreover, the best creative talent today is drawn to independent and boutique agencies where they can work with autonomy, agility, and a sense of ownership. Larger agency groups, burdened by bureaucracy and rigid structures, often fail to provide the creative freedom that attracts top-tier talent. As a result, independent agencies hold a distinct advantage in fostering innovation and retaining the best minds in the business,” he concludes.

Also Read: Ad giants Omnicom and IPG in merger talks