The first quarter of 2013 has been a busy one in the mergers and acquisitions world – 118 deals compared with 105 this time last year.
While the numbers have been growing for the past couple of years, the type of deals that are being done is changing. Website design and build notched up 20 deals in the first quarter and was the most active sector. A year ago, creative agencies took the lion’s share with 12 deals.
When it comes to the number of deals, the UK comes a close second to the US, with 36 and 43 deals respectively. South America proved popular, scoring seven deals, fuelled largely by groups such as WPP and Sapient making strategic acquisitions to expand their presence in the region.
Of the networks, WPP continues to be the most active with 13 deals – it also outpaced the other networks in 2012 as a whole. WPP has apparently earmarked between £300 million and £400 million for further transactions this year, according to recent reports. Publicis Groupe has put aside €500 million per year for the next six years.
So, what’s the story for deals in the more traditional advertising and media space?
The big networks are still doing them, but they tend to be smaller deals and usually in emerging markets. And if you look at the UK, there are simply not that many big independents around, with a few notable exceptions. Nor do such agencies in the main demonstrate the sort of growth trajectories that the networks are looking for when they acquire.
Clearly, a best-in-class ad agency will always attract interest at the right time in its life cycle. Adam & Eve/DDB is a famous case in point and there are others, such as Karmarama and 18 Feet & Rising, with similar appeal.
Top of the buying list of the global networks are high-growth sub-sectors, predominantly digital – though geared towards technology solutions rather than people-based agency services – as well as emerging markets more broadly. It all makes sense when you consider that one of the hottest topics now is how to manage big data and the increasingly overlapping roles of chief marketing officer and chief information officer.
Who should we be watching out for? St Ives Group is interesting as it continues to build its integrated marketing communications offer and leaves its print heritage behind. Its acquisition of Amaze, a digital business with capabilities similar to an LBi or AKQA, marked a further milestone in this ambition. It appears to be an emerging force in the sector as a whole and perhaps it’s only a question of time before it does a deal that will make the ad industry sit up and take note.
Another space to watch is ad tech, with location-based advertising, whether via mobile ad platforms or other means, an increasingly relevant proposition for brands looking to target consumers on the move.
Although it passed without much commentary in the ad world, the acquisition of i-design, a specialist in ATM media sales, by the US-based group Cardtronics for £8.5 million is a good example. Cashpoint users are a captive audience and there are plenty of brands willing to pay good money to target them. The future of free cashpoint withdrawals might depend on such technology if the traditional TV advertising model is anything to go by.
Keith Hunt is the managing partner at Results International
This article was first published on campaignlive.co.uk