John Wren and Philippe Krakowsky reveal their strategy behind the mega-merger

John Wren, CEO of Omnicom, and Philippe Krakowsky, CEO of Interpublic Group (IPG), were in merger talks for eleven and a half months before the the transaction was announced Monday, December 9.

It has been more than ten years since Failed merger between Omnicom and Publicis Groupe and this time, Wren made sure that there was an agreement between the two directors of the holding company before closing the deal.

“We didn’t venture into it until we cleared all those cobwebs and made sure we were completely aligned,” Wren told ADWEEK.

Wren and Krakowsky said the merger aims to combine each portfolio company’s core assets, such as IPG’s data company Acxiom, Omnicom’s trading company Flywheel, two media buying units, a host of iconic advertising agencies, and much more.

“It’s always been a strategic conversation,” Krakowsky said.

The combined companies will be called Omnicom, and company executives plan to cut costs by $750 million in the first two years after closing, primarily by merging back-office capabilities, vendor partnerships and real estate.

“I’ve said it many times, and I mean it: Anyone who manages their revenue through IPG or Omnicom today, their job is more secure this morning than it was last night,” Wren said.

This conversation has been edited for length and clarity.

ADWEEK: John, why make this deal now, and what makes you think it will work this time?

JOHN WREN: Both companies share fundamental common values. Many people who have worked at Omnicom or IPG have been in other people’s groups. We took our time and paced ourselves. We did not rush to conclusions based on the daily challenges or opportunities we faced in our businesses. We have been very thoughtful in going through this process.

PHILLIPPE KRAKOWSKY: It’s about looking at all the ways we can help [our clients]. We need exceptional tools around different types of data, the ability to use it to make decisions, the willingness to put skin in the game when it comes to outcomes.

Where exactly do you see opportunities to streamline the network?

WREN: Until recently, the cost of entry to compete with any of us was pretty low. Today you need very sophisticated tools, platforms and technologies. We have strengths that complement each other throughout this journey. Instead of each of us individually providing resources, we can build it with the combined resources of both companies, build it right, and build it once.

Our sellers will now have to negotiate with a larger buyer.

Being two public companies, we need one management team. Who do you call to find out if your medical benefits will be processed? These things can be centralized. Accounting and invoicing can be centralized. But when it comes to revenue generation, it comes down to [providing] the best people with the best tools.

You will now have many global creative networks at your disposal. Do you need to simplify this over time, and what might that look like?

WREN: I attract and retain customers through talent. What attracts talent are the brands and the culture of these brands. This is not going to change.

Unlike our competitors, we don’t start by saying, “We need to put things together to make them neat so we can articulate them to parties who aren’t buying our services.”

KRAKOWSKY: That’s not to say that there aren’t times when bringing one organization closer to another means that their capabilities can inform each other. We need to connect [the creative agencies] more to the rest of the business and the capabilities of our platform, and then we need to ensure that we have the best talent within them.

What benefits does the merger bring to IPG in terms of primary media buying?

KRAKOWSKY: It became clear 18 months ago that this was a dimension of the offering that is now in play. We started building it, and that speeds up the process significantly.

John and his team are exceptionally able to achieve this in a very seamless manner. Customers understand precisely what is done and how value is generated.

IPG put a some agencies for sale before this deal was announced. Are you still considering selling these agencies, particularly R/GA?

KRAKOWSKY: These were areas where the capability set was unique and therefore premium. Now you can do what was done before in some of these agencies, whether it’s within media, performance or PR agencies. Some of this work is done in the best versions of an integrated advertising agency.

There will be a period between now and the end where we will continue to do our work as an independent entity, and we want to be the strongest version of Interpublic when we join the Omnicom family. So we’re not going to stop making what we think are sound business decisions.