Contact: Brian Satterfield
In order to spread their clients’ messages to as many people as possible in every corner of the globe, old-line advertising firms are increasingly bolstering their online presence by acquiring purely digital agencies.
In the past three years, traditional companies have been the buyers in 86, or almost 20%, of the nearly 450 transactions we’ve recorded in the Web marketing and design sectors. As one might expect, several of the world’s largest publicly listed mega-agencies have been especially busy with buying their online counterparts.
In mid-May, Paris-based Publicis Groupe inked its fourth deal of the year when it reached into China for Longtuo, a Web marketing and design services provider with 200 employees. Publicis Groupe is certainly a steady user of M&A to build its international client base, having purchased 23 Web agencies in almost a dozen different countries since its first buy in 2006. In fact, Publicis Groupe had its busiest M&A year on record in 2011, with seven announced acquisitions, all of them in the Web marketing industry.
Nasdaq-listed WPP Group and its wholly owned subsidiaries have taken a similar approach to Web marketing and design deals, but on a slightly larger scale. Yesterday, WPP subsidiary JWT picked up India-based Hungama Digital Services, a Web marketing and design firm with a headcount of 110. Since 2005, the entities have combined to buy a total of 40 companies in nearly 20 countries. Up until 2008, WPP was almost exclusively focused on strengthening its Web design skills, but has since devoted most of its M&A firepower to acquiring companies primarily devoted to online marketing. Like Publicis Groupe, WPP is off to a busy buying start in 2012, having already made eight different purchases in the sectors via its primary business and six distinct subsidiaries.
One key way in which the two competitors have diverged is how often they are willing to spend big bucks. Publicis Groupe has made three $500m-plus plays, its largest coming in 2006, when it dropped $1.3bn on then-Nasdaq-listed Web design agency Digitas. Meanwhile, WPP has only publicly disclosed one deal value, its $649m purchase of Web developer 24/7 Real Media in 2007.