The ad industry is shaken. But should the government sector care about the Omnicom-IPG merger?

It’s the talk of the town for commercial implications, but let’s be real: Does Omnicom’s acquisition of IPG, merging two industry titans to form the largest holding company in history, matter in the government and public sector?

Let’s look at the facts, the history and what’s at stake.

Here’s the reality

Government work operates at the agency level, not the holding company level. Sure, this consolidation puts nearly $900M in Omnicom federal work together with IPG’s half-sized share from FY2024, creating the largest single player in the space. But when it comes to the actual bids and contracts, the individual agencies like Porter Novelli, Weber Shandwick and Ketchum duking it out — not the holding companies pulling the strings.

Even now, Omnicom agencies like DDB and GSD&M manage Army and Air Force recruitment. Could this acquisition squeeze out a bidder for another branch? Maybe. But let’s not pretend this creates a monopoly — WPP still holds Marines and Navy, and diversity in strategy remains critical.

What’s really at stake?

Some might worry about one holding company owning the lion’s share of military recruitment contracts, but this isn’t new territory. We’ve already seen the unconventional move of WPP allowing VML to manage multiple branches. Competition among agencies under the same umbrella is alive and well — CMS (Centers for Medicare & Medicaid Services) bids prove that with Omnicom’s own Porter Novelli and Ketchum competing.

M&A in government contracting is a different story

Mergers and acquisitions in government contracting are typically driven by the need to add capabilities, gain access to contracting vehicles (similar to agency rosters in the commercial space), or expand into new agencies and departments. What’s interesting about the Omnicom-IPG merger is that it doesn’t achieve these objectives from a federal market standpoint.

Omnicom already has a strong presence in the Department of Defense (DoD), with agencies like DDB and GSD&M. IPG’s MullenLowe adds only a modest DoD footprint, and both holding companies already have a similar public health position at CMS and CDC, with Porter Novelli, Ketchum and Weber Shandwick competing for contracts. Even IPG’s $900M FCB prime contract at the FDA isn’t enough to cause a major shakeup from a governmental perspective.

The consolidation myth

The narrative of this being a “game-changer” for the federal market overlooks a key truth: size doesn’t always equal control. Here’s why.

Agency-level competition still rules the day.

Government contracting is inherently decentralized. Contracts are won and lost at the agency level based on capabilities, expertise, and performance — not the heft of a holding company. Even after this merger, agencies like Weber Shandwick, Ketchum and Porter Novelli will continue to compete for contracts independently. Buyers evaluate the strength of individual proposals, not the size of the umbrella they operate under.

Federal agencies allow multiple holding company bids.

Federal agencies typically permit multiple bids from a single holding company, provided there’s a firewall process in place. For example, in the $1.2B CMS roster RFP, CMS explicitly allows bids from multiple agencies under the same holding company and prefers that individual agencies — not holding companies — act as the lead contracting entity. Additionally, they require a conflict mitigation plan that goes up to the holding company level. This ensures competition, even within the same holding company.

Scale doesn’t automatically change the game.

Yes, the Omnicom-IPG merger creates a federal contracting powerhouse on paper, but size alone doesn’t translate to dominance. 

A perfect example is the merger of J. Walter Thompson with VML under WPP. While this consolidated a wealth of talent and resources, it didn’t make them any more or less competitive in the government space. They’ve retained longstanding contracts for decades but haven’t made notable strides in winning new ones. The merger didn’t fundamentally shift the competitive landscape, and the same is likely true here.

History tells the story.

This isn’t the first major consolidation in the industry. Each time, concerns arise about monopolies or market dominance, yet the playing field remains remarkably level. Federal contracting has safeguards in place to maintain competition and balance.

In reality, while this merger shakes up the commercial world, its impact on the public sector feels overstated. The government contracting market is robust, decentralized, and competitive by design. Omnicom’s acquisition of IPG might grab headlines, but on the ground, the dynamics of agency-level competition will likely remain unchanged.

What happens at the agency level will continue to shape outcomes — not the holding company chessboard.

Mike Kapetanovic is founder of GrowthLab.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}