The last few years have seen an increase in M&A activity in the marcoms sector with just under £8 billion made in deals in 2017. What is particularly noticeable however is a shift in trends towards lower volume, but higher value deals with a decline in the number of deals worldwide falling from 1,023 in 2016 to 847 in 2017.
Hampleton Partners, a leading digital marketing M&A advisory firm, attribute this shift to a greater spending willingness on the part of buyers and a slowdown in venture capital funding which puts added pressure on the sector to consolidate.
Arya Bina, the CEO of Kobe Digital, a leading programmatic marketing agency, notes that another driver of the increased M&A activity is a growing recognition that companies can no longer rely on organic growth to fulfil their digital goals. The digital world continues to expand meaning there is an increased need for collaboration, particularly in relation to the collation, analysis and utilisation of data and social marketing results in order to escalate growth, strengthen market presence and gain a competitive edge.
In addition to the M&A activity across the advertising and marketing sectors, the past few years have seen the entry of a whole host of new buyers, with a noticeable influence from the Chinese markets. Widespread development of big data analytics and programmatic technologies has increased demand from outside businesses who view purchasing digital marketing businesses through M&A as a more effective long-term strategy. Examples of this include the expansion of management consultancies such as Deloitte and Accenture, IBM’s continued development of cloud offerings as well as Verizon’s attempts to gain revenue from their provision of customer data.
The wholesale expansion of activity across the marketing sector in recent years highlights the opportunities M&A brings. When an established business buys a smaller company, this allows them to focus on improving the specific area of expertise of the smaller company, all of which boosts the efficiency of the overarching marketing strategy. Though mergers can pose risks and challenges, they no doubt have the potential to enhance the marketing capabilities of those companies who are willing to be involved.
Below is a list of some of the most interesting deals seen over the past year:
- Wunderman, the WPP-owned global digital agency, recently acquired a majority stake in Pierry Inc., a marketing software integration and solutions company, with the intention of developing a relationship with Salesforce.
- Accenture acquired Intrepid, the Boston-based mobile design and development firm in an attempt to expand its capabilities to support its clients transform mobile user experiences as the use of connected devices continues to soar.
- Merger of Verb Brands, one of the UK’s leading specialist agencies, with DBD Media, a digital marketing agency. The merger was largely in response to a growing demand for more integrated and joined up marketing programmes
- Next 15, the digital communications agency acquired the entire issues share capital of Brandwidth Group, a UK-based digital innovation agency. The acquisition enhances the digital capabilities of Next 15, particularly through the use of voice with the rise of platforms such as Google Home and Alexa serving as a highly disruptive form of marketing.
- Merkle, the global data-driven, performance marketing agency has acquired Oxyma Group, a performance marketing firm. The five agencies within the Oxyma Group all have a footprint in the Netherlands which will complement Merkle’s offerings and improve their reach in Europe, the Middle East and Africa
If you’d like to discuss your mergers and acquisition strategy, TKM’s Acquisition Scout Service provides a great foundation to finding the right targets.
Contact us at hello@tkm-consultants.com