Omnicom has raised its cost reduction target to $1.5 billion following its acquisition of Interpublic Group, with the bulk of savings coming from workforce reductions that will extend well into 2026.

The advertising holding company revealed the revised synergy target during its first earnings call since completing the $13 billion-plus IPG deal in November 2025. The new figure doubles the original $750 million estimate, with $900 million of the total expected to materialise in 2026 alone.

CEO John Wren broke down where the savings will come from during the analyst call. Labour costs account for the largest share at $1 billion, exceeding the entire original synergy target on its own. Real estate consolidation will deliver $240 million, whilst operational efficiencies across general administration, IT, procurement and other areas contribute $260 million.

The labour reductions will focus on eliminating duplicate roles, streamlining agency structures, and accelerating outsourcing and offshoring efforts. CFO Phil Angelastro identified facility management, shared services and technology as areas particularly affected by the shift towards offshore operations.

This marks a significant escalation from the 4,000 redundancies Wren announced in December, which were meant to conclude by year-end. Both Omnicom and IPG had already cut thousands of positions ahead of the merger. IPG reduced headcount by 3,200 in the first nine months of 2025 alone, whilst Omnicom shed 3,000 roles during 2024.

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The combined workforce stood at approximately 128,000 at the end of 2024. Wren’s stated aim is to reduce total headcount to around 105,000, representing an 18% reduction.

Beyond workforce changes, Omnicom is planning substantial portfolio restructuring. The company has identified approximately $2.5 billion in annual revenue from businesses it considers non-strategic or underperforming, which it plans to sell or exit entirely within the next 12 months. It has already divested about $800 million of that total, including experiential marketing agency Jack Morton.

Additionally, Omnicom will reduce its ownership stake to minority positions in businesses representing roughly $700 million in annual revenue, primarily in smaller international markets. Angelastro characterised these moves as driven more by operational simplicity than performance concerns.

The fourth quarter results showed revenue of $5.5 billion, up 27.9% year-on-year, though the comparison includes only one month of IPG’s contribution. Full-year revenue reached $17.3 billion versus $15.7 billion in 2024. However, the company posted an operating loss of $977.2 million in Q4, driven by $1.1 billion in repositioning costs related to mass layoffs, contract cancellations and real estate reconfiguration.

Notably, Omnicom did not report organic growth figures for the quarter, breaking with industry convention where the metric serves as a key indicator of agency health. CFO Angelastro said the company does not plan to share organic growth in quarterly presentations this year. More detailed comparisons will be provided in the annual 10-K filing, which will include pro forma numbers assuming the merger closed in January 2024.

During the call, Wren positioned artificial intelligence as central to the combined company’s strategy. CTO Paolo Yuvienco illustrated AI’s impact by noting that creative teams previously delivering three campaign concepts can now generate 25 to 50 ideas in the same timeframe. Wren acknowledged that AI will eliminate certain positions but insisted it allows staff to accomplish more rather than simply reducing headcount.

When pressed on whether clients would reinvest AI-driven savings into marketing spend or simply reduce agency budgets, Wren offered a more nuanced response than his previous bullish stance. He acknowledged his position evolves daily as AI capabilities advance, and indicated Omnicom is negotiating outcome-based compensation models with some clients rather than traditional hourly billing.

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The company also announced a $5 billion share repurchase programme, including a $2.5 billion accelerated buyback, signalling confidence in its post-merger strategy despite the immediate financial losses.

Integration of the company’s major technology platforms, including Omni, IPG Interact, Flywheel and Acxiom ID, is expected to be completed by the end of the current quarter.

Wren framed the changes as necessary to position Omnicom for sustainable growth and profitability, emphasising the focus on delivering integrated services connecting media, creative content, commerce, consulting, data and technology.

However, the scale of planned reductions raises questions about the holding company model’s viability. Industry observers note that consultancies, in-housing by clients, and platform expansion by Meta and Google continue eroding traditional agency territory. Whilst Omnicom presents the cuts as strategic execution and synergy capture, critics argue they reflect structural pressures affecting the entire sector.

For employees already navigating significant disruption from combining two major organisations, the revised synergy targets signal more upheaval ahead. The promise of doubling cost savings comes with the reality that most of those savings derive from workforce reduction rather than operational efficiency.

Whether Omnicom emerges stronger from this consolidation or simply smaller remains to be seen. What’s certain is that 2026 will be a year of continued restructuring, with thousands more jobs on the line as the company pursues its elevated savings target.