Could Publicis make the next play in social advertising?

Contact: Scott Denne

Today’s announcement by Perion Network that it will buy France’s MakeMeReach marks the second acquisition in social advertising in a week. As we pointed out in a longer report, the rapid growth of advertising dollars into social networks, the coming diversification of platforms and a hodgepodge of startups serving the category are laying the ground for a busy year of M&A activity for businesses that enable buying ads on social media.

Now that Perion and Marin Software , two ad-tech vendors, have bought into the space, who will be the next acquirer? We believe Publicis Groupe, one of the largest ad agency holding companies, will make the next move here. Publicis isn’t new to social. It’s inked some recent, modest purchases of social agencies overseas (Italy’s Ambito5 and China’s Net@lk) and in 2011 nabbed a majority stake in social creative agency Big Fuel. Also, Publicis, with its recently closed pickups of Sapient and RUN, has shown a larger appetite than most agency holding companies to own tech-enabled services and software firms.

Keeping in mind that appetite for tech and Publicis’ existing capabilities in social (mostly in creative, not executing media buys), Facebook API partners such as SocialCode, Ampush, Adaptly, SHIFT and Kinetic Social would make a good match with Publicis. Valuation could trip up a potential deal, though. Most of the above listed vendors are venture-backed and might have expectations for software-like multiples, rather than the services-like multiples that Publicis typically pays (though it has gone higher, as it did with RUN ). A possible solution would be for one of the social advertising vendors to sell off its managed services business to Publicis. That would get Publicis the services business it’s more comfortable with and allow the remaining social ad firm to become the self-serve software provider that most in this space now aspire to be.

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