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
Error: Please check your email address.
Show Comments

Blog Posts

Social purpose: Oxygen for your brand health vitals

If trust is the new currency, then we’re in deep trouble. Here's why.

Carolyn Butler-Madden

Founder and CEO, Sunday Lunch

Customer experience disruption: Healthcare faces a bitter pill

Over the past decade, disruptors such as Amazon, Apple and Australia’s Atlassian have delivered technology enhanced customer experiences, which for the most part, have improved customers’ lives and delivered unparalleled growth. Can they do the same for healthcare?

Alex Allwood

Principal, All Work Together

How can a brand remain human in a digital world?

Some commentators estimate that by 2020, 85 per cent of buyer-seller interactions will happen online through social media and video*. That’s only two years away, and pertinent for any marketer.

James Kyd

Global head of brand strategy and marketing, Xero

Its great to hear that companies including JCDecaux, oOh!media, Omnicom and Posterscope Australia have all partnered with Seedooh inorder...

Blue Mushroom Infozone Pvt Ltd

Out of home advertising companies strive for greater metrics and transparency

Read more

Much ado about nothingAnother fluff piece around what it could possibly do rather than what it is doing

gve

How AMP is using AI to create effortless ‘experiences’

Read more

is it true that Consumer expectations are also changing as a result. If we trust someone with our data there is also an expectation that ...

Sunita Madan

Society will decide where digital marketing takes us next: Oracle

Read more

This Blog is Very interesting to read and thank you for sharing the valuable information about Machine Learning. The information you prov...

johny blaze

What machine learning has done for the Virgin Velocity program

Read more

WE HAVE AVAILABLE PETROLEUM PRODUCTS FROM RELIABLE REFINERY IN RUSSIAN FEDERATION WITH BEST PRICE AND QUALITY. BELOW PRODUCT ARE AVAILABL...

Anatoly Vyacheslav

AI-enabled Emarsys facilitates 20% increase in Global Shop Direct revenue

Read more

Latest Podcast

More podcasts

Sign in