The pursuit of breakthrough data-driven marketing strategies and campaigns was behind a major rise in marketing sector M&A activity in 2019, which hit $30.1bn (£23.1bn) – the highest level for five years – with acquisitions by martech and adtech companies rising 37% in the past 12 months alone.
According to figures compiled by Results International, nearly a quarter of investment came from the private equity sector in 2019; of the 11 most active buyers, five were private equity.
Two-thirds of the private-equity deals in 2019 were within marketing services, with MSQ Partners, Jellyfish, Blueberry Wave, Croud and Kantar securing significant cash injections.
Brand owners are also getting a slice of the action, with McDonald’s, Nike, PayPal and Walmart dusting off their corporate cheque books to reclaim control of their customer data and customer experience activities by investing in adtech companies.
McDonald’s bought voice-recognition and artificial intelligence specialists Apprente and Dynamic Yield to create personalised Drive-thru experiences and PayPal paid a whopping $4bn (£3bn) – its largest deal to deal to date – for digital shopping and rewards platform Honey. Meanwhile Walmart acquired segmentation specialist Polymorph, as well as AI firm Aspectiva and Triad Retail Media and Nike acquired retail analytics company Celect.
Results International international partner Paul Georges-Picot said: “These behemoths have realised that they gave up a lot of their data to tech firms over the years and are now acquiring assets to enable them to take back ownership. This means investing in data collection and analytics, but also monetising that data.”
As Decision Marketing has already pointed out, the traditional marketing holding companies were too busy takng an axe to their operations to go on the hunt for more companies and scaled back their activity. Dentsu once again topped the list of companies making the most acquisitions with 12, but this is way down on the 34 deals it made in 2018.
WPP was second with 15 deals, but Omnicom and Interpublic sat on their hands. Publicis Group made the biggest splash, shelling out $4.4bn (£3.4bn) for data-driven marketing giant Epsilon in a deal which chief executive Arthur Sadoun claimed was “one of the most important” in the company’s 93 year history.
One of most active M&A sectors was “advertising and creative agencies” with 430 deals. In second, was “marketing and sales technology” on 227 deals, with marketing automation and customer data platforms the most active sub-sector at 135 deals. M&A deals for content agencies hit 82 in 2019 – more than double 2018’s 35.
One deal which Results International does not appear to have included, however, is Salesforce’s $15.7bn (£12.4bn) purchase of Tableau Software as it is deemed a tech deal rather than a marketing one. This is despite the fact that it is designed to give the CRM giant a springboard into the analytics market.
Results International partner Julie Langley said: “Marketing services continue to be of real interest to buyers, particularly companies that offer full transformation, that are able to execute faster and that focus on ROI.
“Technology continues to see an increase in deal activity as well, albeit in some cases coming from consolidation among historic assets. Companies taking advantage of the current trends, such as personalisation, measurement/analytics and the growth in demand for quality content (video content in particular) remain well-placed to attract investment.
“Beyond specific sectors, what we’re likely to see more of in 2020 is investors wanting results. The sector’s patience for companies unable to demonstrate profitability is wearing thin.”
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