FTSE 100 giant WPP is under threat of losing its spot as the largest advertising company in the world for the first time in decades as American rivals Omnicom and Interpublic consider a merger.
Over the weekend, news emerged that Omnicom and Interpublic are discussing terms of a $30bn (£23.6bn) merger. This could catapult the world’s third and fourth-largest ad firms to the top position, deposing WPP.
Interpublic’s market cap is almost $11bn (£8.6bn), while Omnicon is valued at over $20bn (£15.8bn). The combined company would have revenue of more than $20bn.
Sources told the Wall Street Journal, which first reported the news, that a transaction could be announced as early as this week.
The merger could put British jobs at risk, as both companies employ thousands in the UK, and the tie-up would likely involve some cost-cutting.
“There is a lot of efficiency to be realised. No question there would be a lot of duplication and a very heavy US overlap,” Brian Weiser, an advertising analyst at Madison and Wall, told the Telegraph.
WPP struggles amid industry growth
French ad giant Publicis has positioned itself to overtake WPP by the end of the year. Analysts estimate 2024 full-year revenue at 13.9bn euro (£11.5bn) for Publicis versus £11.2bn for WPP.
In its latest annual forecast, WPP agency GroupM has predicted global advertising revenue will increase 9.5 per cent in 2024, an upward revision from the June estimate of 7.8 per cent.
The advertising industry will also surpass, for the first time, $1 trillion in total revenue this year and climb 7.7 per cent in 2025 to $1.1 trillion.
The news has left WPP fighting from all sides to maintain its spot as the largest advertising agency in the world, which it has struggled with since the resignation of its founder, Martin Sorrell, in 2018.
In the ad giant’s latest results, it reported that revenue outside of the US and continental Europe had fallen, with UK business failing to grow.
In July, WPP appointed former BT boss Philip Jansen as its new chair after a long search for a steady hand.