Looking back on the M&A Landscape for the Marketing Sector in 2023
M&A transactions are often strategic in nature and are typically undertaken to achieve specific business and growth objectives. M&A activity in the marketing sector are often instigated for expansion, diversification of service offerings, technology integration or access to new clients and industries.
Moore Kingston Smith’s deal tracker recorded 126 UK marketing services deals in Q1 2023, so the year got off to a fast start and never looked back. This level of activity was higher than we saw in any quarter in the last two years. So why is this?
The marketing sector has witnessed significant M&A activity driven by the increasing emphasis on digital transformation. Companies in the marketing space have been particularly active in acquiring or merging with other firms to enhance their digital capabilities in order to give them access to cutting edge tools and knowledge.
Social media platforms and influencer marketing agencies have been attractive targets for acquisition as companies seek to expand their reach and engagement with consumers by tapping into the follower bases of influencers and the user communities on various social platforms. Acquiring social media or influencer-focused companies allows for more comprehensive marketing strategies. Influencers often have established trust and credibility with their followers. Associating with influencers through a merger or acquisition can lend authenticity to the acquiring company’s brand, particularly if influencers align with the brand values and messaging.
Additionally, the rise of SaaS platforms in marketing has led to acquisitions of software companies that offer solutions for automation, customer relationship management (CRM), and other marketing-related functions. SaaS companies typically operate on a subscription-based revenue model, providing a predictable and recurring income stream. This can contribute to financial stability and predictability for the acquiring entity. SaaS companies often have a higher multiple (based on the ARR – annual recurring revenue) than pure play services companies, who’s multiplies are based on profitability (EBITDA).
Below is a short list of relevant deals that occurred in 2023:
In March WPP announced the acquisition of Obviously, a technology-driven social influencer marketing agency. The technology platform developed by Obviously is designed to enhance the efficiency of marketing campaigns, allowing the company to effectively manage large-scale and intricate campaigns for enterprise clients. Following the acquisition, Obviously is set to become part of VMLY&R, which is WPP’s agency focused on brand and customer experience. Notably, Obviously has a track record of serving major clients, including Google, Ford, and Amazon.
In April, Publicis acquired Yieldify, a London-based company specializing in enhancing the personalized website experiences of consumers. Yieldify’s expertise lies in tailoring the online journey for individuals based on their profiles and their specific stage in the purchasing process. The acquired firm will be integrated into Epsilon, the advertising and marketing technology division of the global communications giant.
Meanwhile, rEvolution, a sports marketing agency based in the United States, expanded its portfolio through the acquisition of Sine Qua Non, a PR and communications agency located in London. Specializing in tech-forward PR, communications, and sports sponsorship, Sine Qua Non brings its diverse client portfolio, including NetApp, Hyundai, Tata Communications, and Toyota, into rEvolution’s fold. This move adds significant depth to rEvolution’s client roster, which already includes prominent technology and automotive partners such as Capgemini, Lamborghini, and McLaren Racing.
The Brandtech Group has finalized the acquisition of Jellyfish, a digital media and marketing group. This strategic move is aimed at enhancing Brandtech’s global presence and capabilities. With this strengthened partnership, the company is poised to further advance its efforts in attracting business from major marketers on a global scale. The expanded and fortified company is now ready to take significant strides in winning over key players in the marketing landscape.
Dentsu Group Inc acquired Tag Worldwide Holdings Ltd., an established omnichannel digital marketing production company, through a definitive agreement with Advent International. This strategic move aligns with Dentsu’s broader strategy of delivering integrated solutions to clients by combining marketing, technology, and consulting services. The acquisition is expected to elevate the synergy among the group’s service offerings, facilitating a seamless convergence. Leveraging Tag’s digital infrastructure and services, the acquisition aims to accelerate the delivery of high-quality content with efficiency and scale for creative purposes. Additionally, it will enhance capabilities in personalized customer experience management (CXM) and contribute strength to Dynamic Content Optimization (DCO) in the media domain.
If you’re considering reviewing or developing your mergers and acquisition strategy, we invite you to connect with us. Our team is well-equipped to engage in a comprehensive discussion, offering insights, expertise, and tailored solutions to ensure your M&A requirements align with your business goals and objectives. Let’s explore the strategic possibilities together.
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