IT vendors, professional services firms rival agencies for marketing services M&A

New JEGi and Clarity report into M&A activity across the marketing services space in 2016 finds more than one-third of deals were done by those outside the sector

IT vendors and professional services consultancies are increasingly competing against traditional agencies for acquisitions in the marketing services space, according to a new report.

The Annual Marketing Industry Report for 2016, produced by M&A advisory firm, JEGi and Clarity, looked at M&A activity in the marketing services sector across North America, Europe and Australasia. It found 39 per cent of the 867 transactions announced during the past year were made by companies with a heritage outside of marketing service. The list included software and IT services groups (7 per cent), traditional consultancies (5 per cent), and financial investors (11 per cent).

Of the transactions undertaken, nearly two-thirds targeted specific capabilities, with strategic communications the most sought after specialist capability at 96 transactions over 2016.

Across the board, the list highlights the industry wide quest to secure digital, data, martech and adtech expertise. After general agency services, full service digital was the most popular category for M&A activity, at 114 transactions, while specialist digital accounted for 90 of the deals made last year.

Martech also made a strong appearance, representing 94 of the total transactions covered by the report. This list included Salesforce’s acquisition of Krux Digital for US$768 million, and Adobe’s purchase of TubeMogul for US$626m. Other notable M&A categories were performance marketing (78) and adtech (57).

The most serial acquirer over the past 12 months was holding company, WPP, at 23 acquisitions. Six deals involved specialist digital capabilities, while three were full-service digital.

Dentsu also made 22 acquisitions in the last year including three in Australia, placing the emphasis on agency services (10 transactions), performance marketing (four) and full-service digital (three). Local deals included digital marketing agency, Search Factory, CRM creative player, With Collective, and performance marketing specialist, Scorch.

Across all geographies, Dentsu was the most acquisitive global network at 40 transactions, a number that reflects the group’s ambition to become a 100 per cent digital business by 2020. However, the report found M&A activity by global networks had slowed to its lowest level in five years.

Instead, it’s IT companies and traditional consultancies making an increased appearance. One notable example on the top 10 list of acquirers was Accenture, with six acquisitions during 2016. These included specialist digital services (two) and agency services (two).

IBM was the other notable non-agency purchaser, making five acquisitions over the past year with four digitally focused deals. Three occurred within a week of each other and included two German agencies, ecx.io and Aperto, plus US-based digital agency, Resource/Ammirati. These all now sit under the vendor’s iX unit, which it claims is now the largest digital agency worldwide.

Overall, the top 10 acquirers represented 103 transactions.

The report authors said they expected M&A activity to continue in 2017, particularly in the mid-market, as the ecosystem continues to change and evolve.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

How to create profitable pricing

How do we price goods and services? As business leaders, we have asked ourselves this question since the history of trading.

Lee Naylor

Managing partner, The Leading Edge

Sport and sponsorship: The value of event sponsorship

Australia’s cricketers captured the nation’s attention during their recent run to the semi-final of the ICC Men’s World Cup. While the tournament ultimately ended in defeat, for over a month it provoked a sense of belonging, hope and empowerment for millions of people across Australia. Cricket, and sport in general, has a near-unique ability to empower individuals, irrelevant of their background, demographic or nationality.

Nikhil Arora

Vice-president and managing director, GoDaddy India

AI ethics: Designing for trust

As artificial intelligence (AI) becomes much more prevalent and increasingly a way of life, more questions are being asked than answered about the ethical implications of its adoption.

Katja Forbes

Founder and chief, sfyte

I spend a lot of time in my professional life as a provider of marketing solutions trying to persuade customers that CX, UX, UI and Custo...

sketharaman

Gartner VP: Why CMOs and CIOs must band together to make CX a discipline

Read more

I live the best deals at LA Police Gear.

Tyrus Rechs

6 Ways to ramp up Social Media to Your Web Design

Read more

Its absolute over priced acquisition. The CEO, must be fired for this all cash transaction. Absolutely no justification for prospective P...

about_face

Analysts question long-term play of SAP's acquisition of Qualtrics

Read more

Very well written Nikhil! Indeed this is a big ticket investment, but the impact on brand, sales and employee motivation should make it w...

Yugal Sachdeva

Sport and sponsorship: The value of event sponsorship

Read more

As someone with both experience in marketing and working with UiPath both, I can say that I cannot wait to see more marketing processes u...

CiGen RPA

What robotic process automation can do for marketers

Read more

Latest Podcast

More podcasts

Sign in