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Media Buying Briefing: M&A shows no signs of letting up despite economic headwinds

Heres a question: With inflation running rampant, interest levels surging and an economic depression lurking around every corner, exactly what will eventually the once-red-hot mergers and acquisitions marketplace in agency land for the others of the year and into 2023?

Those that expected a cooling-off in M&A due to the darkening clouds were set for a surprise the other day once the Brandtech Group released a terse statement saying its entered exclusive negotiations with French investment firm Fimalac to obtain Jellyfish Group, a digitally focused marketing services agency run by Rob Pierre, where Fimalac owns many stake.

Though none of the parties would touch upon the proposal, it appears its not only private equity firms which are out to get agencies in these challenging times. The Brandtech Group, run by ex-Havas leader David Jones, has assembled a fascinating range of services to become, as Jones told Digiday back June, the Salesforce of marketing.

However the company has been light on the media side of its holdings, making a Jellyfish acquisition seem smart, said an executive at a media consultancy who declined to speak on the record. Just as much as theyd want to pursue the big global accounts, theyre not likely to get anywhere near it because of the size, said the exec. With Jellyfish, they might employ a sizable, very scalable, global media offering, albeit digitally focused, to contend with the Stagwells and S4s, who they probably havent been had the opportunity to get near. This fundamentally gives them scale and credibility for the reason that media buying and implementational space.

Beyond Brandtech Groups surprising but smart move, other investment advisors argue this may be another strong M&Market. This past year, total M&A for agency and marketing services totaled over 400 deals for pretty much $10 billion from strategics and PE firms, in accordance with Michael Seidler, founder and CEO of M&A advisory firm Madison Alley.This season up to now, Q1 totaled over 115 M&A deals for over $4.5 billion, and Q2 totaled 125 deals for $1.5 billion.

That activity has convinced Seidler there exists a trillion dollar market chance for the broader marketing and sales communications world, in the event that you lump in consultancies and ad tech. The marketing services groups only are about 10 percent of this, said Seidler, listing consultancies such as for example Accenture or Deloitte aswell multinational firms like Tata, Wipro or Infosys. So we visit a huge opportunity that plays out on the list of marketing service groups because they begin to build their development capabilities, their custom software development and strategic digital transformation.

Ryan Kangisser, managing partner of strategy at MediaSense, points to retail media being an area where specialty shops may be popular. Weve seen the growth of retail media in the U.S. yet the expertise around that’s still quite scarce, he said. So if you can find independent businesses on the market that can gain traction with brands, clearly theres likely to be some some activity there.

Mark Penn, CEO of holding company Stagwell, said following the companys earnings call that it plans to keep acquiring section of a long-term technique to take on the original holdcos. Our strategic goals are to expand more globally also to expand our technology footprint, said Penn. Forex is really a big factor the strong dollar implies that it is possible to go buy 30 percent more ofsome company in another jurisdiction. If you have a 20 or 30 percent decrease in [agency valuation] multiples and a 20 or 30 percent currency advantage, at the very least as a U.S. company once we are, I believe that could create some openings for additional M&A.

Then theres the private equity world, that will not sit quietly, especially as several two-to-four-year-old acquisitions approach the flipping point (most M&A advisors concur that PE firms usually flip their acquisitions within five years). Seidler noted several independent agencies purchased for the reason that time frame could possibly be on the market in a short time, including Real Chemistry, Bounteous and Tinuiti. Even PMG, which just won a big chunk of Nikes media duties, is actually a target for acquisition, Seidler added.

An added consideration thats in the same way important is culture, said Doug Baxter, head of Agency Futures, a London-based M&A consultant. Is there dynamics, both culturally and from business services and synergies points of view, that permit the power of 1 and something to equal five? Baxter asked. Thats really what youre seeking to do, would be to find individuals who do share a standard vision, but additionally have techniques they are able to integrate their business which makes sense.

Color by numbers

As content becomes more targeted, advertisers seeking to reach diverse audiences should consider in-cinema advertising. National CineMedia shared stats with Digiday that show broad representation in movie seats. Some highlights:

  • Jurassic World: Dominion delivered a multi-generational audience made up of 41% Caucasian, 25% Hispanic and Latino, 16% Black, 15% Asian and 5% other viewers;
  • NCM says its seeing 58% diversity demos normally for opening weekends, generating higher reach than endemic players on the list of 18-34 age demographic;
  • In comparison to linear TV, NCM says movies have the next highest reach of Hispanic consumers 18-34, behind only Univision, while claiming to out-deliver BET on Black viewers 18-34 by a lot more than 2 times;
  • In comparison to 10 years back, movie audiences are actually 30% more multicultural, 40% more Hispanic, 30% more Black and 46% more Asian.

Takeoff & landing

  • Dentsus iProspect promoted two longtime executives to new positions, because the performance marketing agency goes full service in media: Michelle Snodgrass becomes executive vp, head of strategy, up from senior vp; and Rachel Starr becomes executive vp, head of planning, up from senior vp. Both will are accountable to UNITED STATES CEO Danielle Gonzalez.
  • Social listening and analytics firm Sprout Social is adding Instagram Reels to its video management capabilities to greatly help brands and agencies utilize the platform, after having registered Tik Tok recently.
  • Independent digital agency BAM Strategy, located in Montreal, found work with online grocery delivery service FreshDirect, that it’ll build the brands first loyalty program.

Direct quote

The strategic decision to create Gale an innovative media consultancy to create creative and media together [attracts] accounts that could have attended two separate agencies previously. They [brands] now recognize that internet marketing requires such greater coordination between creative and media, that I believe weve hit a fresh sweet spot available on the market with this particular combination.

Stagwell CEO Mark Penn in explaining how Stagwell agency Gale achieved 150% growth within the last year.

Speed reading

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