Marketing M&A remains strong

Research released on Wednesday has highlighted a buoyant first three quarters of 2019 for M&A activity in the marketing sector. The analysis was carried out by Results International, leading global M&A and fundraising advisors to the marketing, technology and healthcare sectors.

There were 1,057 global deals in total from Q1 to Q3 – 636 in marketing services and 421 across MarTech and AdTech, up 16% on the same period in 2018. This was mainly driven by MarTech and AdTech deals (up 52% in aggregate versus the same period last year), whereas the number of deals in marketing services was flat (636 versus 634 in the first nine months of 2018).

The headline deal this quarter was, of course, Bain Capital’s acquisition of Kantar Media for $4bn,  part of WPP’s continuing restructuring and refocusing plan. Other large deals worth mentioning include Vista Equity Partners’ acquisition of Acquia for $1bn, Blackstone’s acquisition of Vungle for $750m and Veeva’s $430 million purchase of Crossix.

Advertising & creative agencies was the most active marketing services subsector in Q3, with 133 deals. Within advertising & creative services, as with Q2 2019, roughly half of the deals were in the full service and UX/UI design sectors. This is the continuation of a long-term trend in advertising, namely that marketers are keen to buy businesses that have an integrated offering with a full-funnel proposition and the ability to build and activate digital experiences at scale.

Within marketing and e-commerce technology, sales technology continues to be the most active subsector in Q3, with 40 deals. The main areas of focus are customer intelligence and CDP/CXPs with eight transactions in aggregate, bringing the total number of deals in this space to 26 for Q1-Q3 2019. This highlights brands’ and marketers’ ongoing need to resolve identity in order to unlock highly personalised customer engagements. A good example of this is the acquisition of Mintigo by Anaplan for $40m in August.

Email marketing also saw eight deals this quarter, making it one of the top sectors within marketing technology to date and providing further proof that email continues to be the most effective way to engage with customers on an individual basis and in a privacy-compliant way.

Julie Langley, partner at Results International said, “Data-driven personalisation continues to lie at the heart of what brands and marketers are looking to achieve and is behind some of the more intriguing deals this year, bringing yet more new acquirers into the space. These includes McDonald’s acquisition of Dynamic Yield and Veeva’s acquisition of Crossix”

There were 86 AdTech deals worldwide in Q1-Q3, up 83% from the 47 deals completed in Q1-Q3 2018. A notable deal in this space was Blackstone’s $750 million acquisition of Vungle, a mobile advertising and app monetisation firm. It is one of the largest AdTech deals in the past two years and lies at the intersection of two significant industry trends: mobile and private equity investments. App monetisation continues to be a challenge for publishers and growing AdTech companies continue to attract PE money – albeit less than MarTech.

This year is also seeing the end of consolidation within the DSP space. In Q1, Video DSP Taptica (acquirer of Tremor’s DSP in 2017) merged with RythmOne (acquirer of Yume in 2017). Later this year, Zeta Global, CRM data vendor turned marketing platform, bought Sizmek’s DSP and DMP assets. Zeta then acquired IgnitioneOne’s programmatic business in September. IgnitionOne will adopt Zeta’s DSP as its exclusive self-service programmatic platform.

The third quarter of 2019 saw a slight drop in the number of private equity deals across services and technology: 74 in Q3 compared to 91 in Q2 and 89 in Q1. Meanwhile, trade buyers have accelerated their external growth this quarter. The top three buyers in Q3 were all trade: Dentsu made four acquisitions, while Publicis and Blue Field (a Netherlands-based full-service agency) made three acquisitions each.

First place this quarter goes to Legacy Acquisition, a special-purpose acquisition vehicle rebranded as Blue Impact following the acquisition of five companies from Chinese group BlueFocus Communications for $615m.

Overall, for the first nine months of 2019, the top buyer was Dentsu with 10 acquisitions across both marketing services and technology, followed by private equity house Insight Venture Partners whose acquisitions were all additional portfolio add-ons. Ranking third is Accenture with seven transactions, continuing to be the only consultancy to make the top buyers list.

Julie Langley added, “Accenture is leading the charge by some margin when it comes to management consultancies expanding their footprint in the marketing space. It has repeatedly shown the appetite to invest heavily in marketing services and digital transformation agencies, while others are either adding capabilities at a slower pace or are focusing on other areas of consultancy.

“With trade buyers continuing to seek to leverage data to know and engage with their customers at a hyper personalised level, and a continued flow of new entrants and new capital into the markets, there is unlikely to be subdued interest within the marketing services and technology space in the foreseeable future.”