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How the Omnicom-IPG merger could reshape pharma marketing
As the dust settles on Omnicom’s proposed take over of Interpublic Group (IPG) to create the industry’s largest agency by revenue, medical marketing leaders are opining on what that could mean going forward.
The two holding company titans revealed their plans Monday to form an advertising behemoth that would impact more than 50 medical marketing agencies across the country.
Details on the exact structure and leadership of the new entity are not fully known, but speculation about how it could affect industry dynamics has run rampant — particularly on social media.
Perhaps unsurprisingly, the resounding sentiment across the industry is a profound sense of anxiety and uncertainty.
There are concerns about how this level of corporate consolidation could affect the production of creative marketing, result in sizable layoffs and lead to an exodus of critical pharma brand knowledge.
However, not all hope is lost, as some independent agencies see opportunities to differentiate themselves by offering specialized insights and tailored services to pharma clients, while also adding talent who may leave the new Omnicom.
Impact on adland personnel
Medical marketing leaders are mindful that, as is often the case in mergers of this size, layoffs are nearly inevitable.
While scale offers agencies advantages like bolstered creative capacities, data analytics and media buying, it also leads to redundancies in terms of back-office services and top-level positions.
The two corporations, which each employ tens of thousands of workers, have projected the merger will result in $700 million in savings.
However, questions remain about how those savings will be achieved and who will benefit from them. Neither Omnicom or IPG have responded to requests for comment.
Gil Bashe, chair of global health and purpose at Finn Partners, a 2024 MM+M Agency 100 honoree, questioned whether the merger’s financial potential will truly benefit employees and clients or just provide additional profit to shareholders.
“Who is [the merger] helping? It certainly will help the shareholder — they’ll realize more profitability. Now, more profitability will allow them to, ideally, do more stuff. But will that stuff include more competitive wages and paying people more money or will it be bigger dividends? Who’s going to benefit from all this?”
Plus, as Bashe observed, advertising is a knowledge business — even more so in the medical marketing field.
As the healthcare industry becomes more specialized, there will be an increased need for agencies to have deep medical expertise on hand to match the disease state or therapeutic area of focus.
Corporate consolidation that provides clients with fewer options for agency partners that are already broader in scope could prove incompatible with pharma’s marketing needs.
Bashe said he expects clients will increasingly seek out agencies with niche expertise that understand their specific needs, rather than just the largest players in the space.
“Clients are diverse enough and unique and have their individual preferences to the point where they’ll say, ‘I need an agency that fits my specific operational needs,’” he said.
Bashe also expressed empathy for employees at both companies, adding his concern that the merger will create distractions for them and affect the quality of work and client relationships.
In the weeks and months ahead, don’t be surprised to see some firms like Finn start actively hiring talent that may leave the merged organization. Bashe said indie medical marketing agencies stand to benefit from the exodus of creative talent from these holding companies.
Opportunities for indie agencies
Though it remains to be seen how the deal will ultimately impact the industry, large- and mid-sized medical marketing firms aren’t taking the news lying down.
Indeed, many independent agencies told MM+M that they are not feeling immediate pressure to merge or acquire other agencies in response to the Omnicom-IPG deal.
Instead, they are focused on generating organic growth and delivering customized experiences for their clients.
Real Chemistry CEO Shankar Narayanan wrote in a statement on Monday that it is still too early to fully understand the scope and structure of the merger and its full ramifications for the industry.
“The news about Omnicom and Interpublic Group represents a potentially large and complex transaction,” he stated. “It is still too early to fully understand the scope and structure in terms of how this transaction will ultimately move forward and its potential impact on our industry.”
Indie agencies also see opportunities to serve clients who may be looking for more specialized and nimble partners.
Calcium+Company’s group president and managing partner Greg Lewis said the merger will create increased opportunity for independent agencies, who he said are “unencumbered by the complexities of large-scale integrations.”
These firms, he claimed, are well-positioned to offer tailored services that appeal to pharma clients desiring flexibility and high-touch engagement.
Culture and integration
Culture is another key factor in the future of this deal, especially given that a clash of cultures was partly to blame for the demise of the Publicis-Omnicom merger that was called off in 2014.
One MM+M Agency 100 honoree that spoke on background in order to discuss the merger candidly noted that non-holding company agencies emphasize the value of maintaining a strong, integrated culture and avoiding the bureaucracy that can present as a challenge for larger, merged entities.
This agency also raised the question of whether these two advertising giants are going to embrace the unique subculture of health agencies at their disposal — such as Area 23, Neon or Biolumina — or try to unify them under a singular brand identity.
Uniting two large entities in a holistic way is a challenge but there is a belief within this agency that Omnicom and IPG will move in a deliberate, strategic way to build out this revamped corporate culture.
While all of this gets sorted out within the two agencies and at the regulatory level, the priority for indie medical marketing shops going forward is cutting through the noise to focus on the clients and campaigns ahead of them.
Bashe echoed the sentiment that independent agencies can thrive by focusing on their people, culture and client relationships. He added that this merger is an opportunity for these organizations to differentiate themselves through their scale, collaborative culture and ability to attract and retain talent.
“When we get down to the nub in health communications, it’s not about the 100,000 people — it’s about the 15 people who understand intimately the challenge you’re about to engage in, embark on and resolve,” he said.
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