The digital transformation of marketing is having an impact with agencies looking for technology to give them an edge. Technology companies are also buying agencies for their marketing skills. M&A activity in the ‘platform economy’ and in social commerce are two of the biggest trends identified in the latest E-Commerce and Digital Marketing M&A Market Reports from Hampleton Partners, the international technology mergers and acquisitions advisor.
Ralph Hübner (pictured), sector principal, Hampleton Partners, said: “2019 has begun with a total rebalance of the deal mix: agency M&A is down, while digital marketing software M&A is up. Where agencies are concerned, today’s acquirers are just as likely to be IT consultancies or corporates as they are media networks.
“Meanwhile, marketing software providers are caught up in a new hype cycle which includes buyers from a range of sectors.”
Transaction volume for the digital marketing sector has remained stable since 2011, but in the first half of 2019, marketing application software received more M&A attention, with 95 deals inked and disclosed deal value of $2.06bn, versus 67 deals and deal value of $1.4bn for digital agencies & marketing services providers, it says.
The top two acquirers so far this year are Dentsu Aegis and Accenture, with four agency acquisitions apiece. The ‘big four’ media agencies – WPP, Omnicom, IPG and Publicis – made no acquisitions in the first-half of 2019.
Instead, two of the most important digital marketing deals were in the software subsector, as risk advisory and brokerage firm Wills Towers Watson acquired TRANZACT for $1.2bn, and McDonald’s purchased personalisation platform Dynamic Yield, for $325m.
Ralph Hübner concluded: “The rise of platforms, marketplaces and social commerce will lead to more exits in the marketing application software segment, as all types of buyers attempt to navigate the marketing landscape of these new business models.
“As for agencies, they need their own tech or unique skillset in areas such as CRM, big data, social commerce or retail media, to avoid being sandwiched between nearshored competitors or the client’s in-housing of marketing and advertising.”