Through much of a challenging 2020, the marketing-services industry’s energies were focused inwards on consolidation of operations and conservation of resources, as companies sought to nurse their debilitated businesses through the pandemic. However, as marketing spend rebounded, companies across the marketing ecosystem quickly loosened their pursestrings and went deal-hunting through much of 2021.
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2021: The year in review
Data from different sources points to a heightened pace of M&A activity across the marketing universe. This surge in deal-making was visible in the numbers announced by different M&A advisors and banking boutiques focused on this space. For instance, halfway through 2021, in July 2021, Campaign AI reckoned adland recorded 74 deals, the highest monthly count since the beginning of 2020. As a sign of things to come, deal-making was up 22% in H1 of 2021.
M&A activity kicks into high gear
The M&A fervour (a full $6 trillion is expected to be spent in 2021 across all industries), also drove dealmaking in the tech space, with a spike in activity in larger transactions, according to data from Luma Partners, an advisory service. M&A deal count was robust across adtech, martech, and digital content, as deal activity grew on a year-over-year basis. There were 31 scale deals (mergers and acquisitions that aim to add scale to an existing business) valued at over $100 million across these segments (compared to 28 in Q2 2021, and 62 in all of 2020), according to data from Luma.
Traditional large networks led the way, with the likes of WPP notching up four deals in the year including Cloud Commerce and Satalia, while other large networks jumped into the fray with Publicis acquiring CitrusAd.
Omnicom upped its performance play with Jump 450 and Havas took over BLKJ. “The portfolio we are left with matches where clients need and are going to spend money now and for the foreseeable future,” Omnicom CEO John Wren said on a Q3 earnings call.
Other networks used the opportunity to right-size their operations, with IPG selling 303 MullenLowe Australia and merging FCB Health and McCann Health and Dentsu, which made a splash with Merkle’s $250 million acquisition of LiveArea, spending much of the year retooling its operations and downsizing to just six key brands. Enroute, it consolidated and merged local operations by merging Isobar into Dentsu Digital in Japan and Isobar and Lemonade in Malaysia. Globally iProspect subsumed Vizeum. Other networks, including Hakuhodo and ADK, were also acquisitive through much of the year.
Charge of the new brigade
However, rather than traditional ad networks, it was consultancies such as Accenture and Capgemini that set a hot pace for M&A in 2021. Accenture made deals for King James in South Africa and Japanese CX agency Tambourine in November.
“We now expect to invest about $4 billion in strategic acquisitions this fiscal year, with 39 acquisitions close or announced," CEO Julie Sweet said recently on an earnings call. "Our level of investment demonstrates how scale, experience and trust matters.”
For its part, Capgemini acquired 1100-employee transformation and digital services company Empired in Australia and New Zealand. It also pressed forward with a quiet but aggressive ramping up the brand innovation, design and transformation capabilities of its Invent business across Asia-Pacific. Invent is building a new APAC network around Frog, the brand experience design consultancy, and Cambridge Consultants, both acquired through its $4.1 billion acquisition of Altran, completed in April 2020.
Deloitte acquired content-production agency Madras Global in November 2021.
Martin Sorrell’s S4 Capital was another newer network which made aggressive moves to increase its footprint across the world. Starting in 2021 with two deals in the US for Decoded Advertising and Metric Theory, the industry veteran’s challenger network piled up half-a-billion pounds (around $700 million) to make these deals. In May 2021, S4 announced it was keen to explore further “merger opportunities…in high-growth functional areas of the content and data and digital marketing practices."
Another private equity-backed challenger, Dept, the Dutch network that just announced its launch in APAC, announced its takeover of Feed, a digital content shop with offices in several cities worldwide including Sydney, in mid-December.
As the marketing landscape continues to evolve, it may not be old networks or newer tech-centric challengers alone who are interested in increasing their footprint. In early 2021, Campaign revealed that Publicis had revealed a takeover offer from private-equity investors, as this well-financed set sought a bigger piece of the action.
Tech companies were red hot
Meanwhile in the red-hot world of technology, besides Publicis’ deal for CitrusAd, the market saw a raft of other transactions. IAS’ takeover of Publica, Magnite acquiring SpotX, Applovin’s acquisition of Mobpub and, in APAC, Inmobi's acquisition of Appsumer point to a heightened pace of deal-making in this segment. Besides traditional M&A, several companies in this space also went the blank cheque merger route, with a SPAC (special-purpose acquisition company) listing. AppLovin, DoubleVerify, Integral Ad Science, ironSource, and Taboola all had trading debuts, while martech firms Sprinklr, SquareSpace, and Zeta also began trading in the public markets in Q2.
Away from the agency world and fast-growing tech developments, the media market saw plenty of action too. Consider Spotify, which acquired Megaphone for $235 million in 2020 to boost its podcast unit and this year made multiple deals including one for Australian venture Whooshka to build out on this acquisition, Findaway to boost its ebook offering, and Locker Room to expand its live audio capabilities.
In the wider media market, consolidation was in the air at a global level (check out the Warner Media Discovery deal) and in specific markets (In India, with Sony acquiring local broadcaster Zee), as networks looked to bulk up on their businesses.
A review of 2021’s hectic dealmaking wouldn’t be complete without listing the M&A activity across some of the world’s biggest brands. Take consumer goods giants Unilever and P&G. The former divested its tea business to a private-equity consortium, even as it deepened its D2C presence with the Paula’s Choice deal in skincare. The latter took over indie label Farmacy Beauty to not just add $80 million to its topline by year-end, but also appear trendier.
Outside of this market, the other area that saw plenty of activity was in the apparel and accessories market, with the likes of Nike (first with Datalogue to deepen its presence in DTC and then RTFK, a virtual footwear venture) and Birkenstock selling to L Catterton. However, the deal-making pace—for this segment and likely across the board—was probably set in January itself when luxury house LVMH closed its purchase of storied jewller Tiffany’s for $15.6 billion.