In a deal said to be reshaping the global advertising industry, Omnicom has reached a definitive agreement to acquire a major rival, the Interpublic Group (IPG), in a stock-for-stock transaction. If the deal receives regulatory approval, the New York-based ad giants will combine to form an agency that will be the largest in the world, bringing together ad legends TBWA Worldwide and McCann Worldgroup for what CNBC estimates will be more than $26 billion in annual revenue. The merger joins “world-class, highly complementary data and technology platforms” at a propitious time, thanks to seismic, AI-driven advances in marketing and adtech.

“The stock deal values Interpublic at more than $13 billion,” according to The Wall Street Journal, which says the deal “is intended to help the combined company better compete with tech behemoths such as Google and Meta Platforms, which have emerged as dominant forces in the advertising business and stand to push even further into Madison Avenue’s territory with the rise of generative AI.”

That technology is expected to allow Big Tech to take on core creative development functions for brands, thus cutting into an area that has traditionally been assigned to advertising agencies.

As with mass media, The New York Times says the advertising industry has suffered “years of transformation and disruption” as a result of digital ads displacing analog channels and new players like Google parent Alphabet and outlets like Meta’s Facebook and Instagram accruing market share.

“The tech and consulting giant Accenture has also made a big push onto the agencies’ turf, acquiring dozens of creative studios and related companies,” NYT points out.

“The merger of the world’s third- and fourth-largest ad companies will usurp WPP as the industry’s biggest player and bring together some of the world’s best-known ad brands,” WSJ writes. London-based WPP grew exponentially in the late 1980s through the acquisition of J. Walter Thompson and Ogilvy & Mather.

“Through this combination, we are poised to accelerate innovation and harness the significant opportunities created by new technologies in this era of exponential change,” Omnicom Chairman and CEO John Wren said in an announcement. The new company will have more than 100,000 employees and the ability to deliver “end-to-end services across media, precision marketing, CRM, data, digital commerce, advertising, healthcare, public relations and branding.”