The $35 billion Publicis-Omnicom merger 'started as a joke'

One of the biggest mergers of 2013—one that's set to create the world's largest advertising group—began with a casual joke between two chief executives.

On Sunday, Publicis and Omnicom unveiled plans to merge. The move would create a company with a market capitalization of $35.1 billion.

The executives of Publicis (a French company) and Omnicom (U.S.) explained that the combined company has "a lot of reason to exist," as they expect that it will help clients to be more nimble in a rapidly shifting advertising environment.

The merger "started as a joke" when the two CEOS were standing on an outdoor terrace at Publicis headquarters, Publicis Chairman and CEO Maurice Levy told "Squawk on the Street" on Monday. "John [Wren, CEO of Omnicom] said, 'This is a priceless view,' and I said, 'You can get it.' "

"It started that way," Wren added. "Over time, at other social occasions, we said, 'Are you really kidding?' and then we started having more private, serious conversations. And it turned out that it was actually possible to accomplish, and we have."

(Read more: Rivals question $35 billion global ad deal)

Levy said that the strategy is not to compete against big technology companies like Google and Facebook, which are becoming increasingly important in advertising, but to work with them.

"We are already collaborating," he said. "We don't believe it would be good to have Google and the like having the position to minimize the advertising agencies. We are enabling our clients to get equal footing."

(Related: Publicis CEO: Digital, US rebound driving revenues)

The merger allows the combined company "to have a different level of conversation" with companies such as Facebook and Google, Wren said.

Although the merger is pending subject to regulatory approval, the CEOs said that they "do not anticipate any major hurdles." In addition, the response from the French government—historically more likely to delay cross-border mergers—has been positive on the proposal, they said.

—By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul