Dive Brief:
- The value of mergers and acquisitions (M&A) in the marketing sector totaled $33 billion in 2018, a 144% increase over the previous year, CNBC reported, citing data from consultancy R3.
- Tech companies spent the most on M&A last year. Adobe’s acquisition of software firm Marketo for $4.75 billion was the largest in R3’s December M&A league table. Salesforce and Alibaba spent a combined $7.8 billion in 2018, over the $632 million spent in 2017. Alibaba acquired a 6.62% stake in Focus Media for $1.43 billion in July.
- Ad agency holding companies, including IPG and Dentsu, spent $6.3 billion on M&A deals in 2018, an increase over $2.7 billion from the year before. IPG spent $2.3 billion on Acxiom Marketing Solutions.
Dive Insight:
Tech companies leading M&A for 2018 reinforces the sector's interest in monetization through marketing and advertising as media continues to become more tech focused and data driven. One of the more interesting findings from the report is how ad agencies are investing more heavily, likely in an attempt to enhance their digital capabilities to keep up with client demands ri meet consumers’ shifting needs and desire for more personalization.
One of the biggest marketing services deals of the year was IPG’s acquisition of Acxiom’s data marketing division, which will boost IPG’s data capabilities and let Acxiom Marketing Solutions tap into a vast network of agency talent and brands, enabling better targeting, personalization and measurement of ROI.
Traditional ad agencies have been struggling in recent years, as they strive to adapt to emerging technology and compete with smaller, more specialized shops. Seventy-four percent of multinational brands are reviewing their current agency arrangements, research by the World Federation of Advertisers and The Observatory International revealed. Some agencies have worked to adapt to the changes by snapping up tech and other companies.
Ad holding company WPP saw the resignation of longtime CEO Martin Sorrell in April, and his successor Mark Read merged agencies within the company. Young & Rubicam merged with digital agency VML to form VMLY&R, and J. Walter Thompson and Wunderman merged to create Wunderman Thompson. WPP also spent $464 million on acquisitions, including marketing technology company Emark and digital agency Autumn Worldwide, per the R3 report. Sorrell’s newly created S4 Capital spent $475 million purchasing agencies MediaMonks and MightyHive. WPP-owned Grey Group also launched Grey Consulting to focus on business and brand design, innovation and digital transformation.
