It has been another busy year for acquisitions across adland and tech. While Publicis struck one of the marketing services industry’s biggest ever deals this year, WPP made one of its biggest divestments, Accenture added an important string to its bow, and Dentsu remained acquisitive despite global staff retrenchments this year.
While privacy was a theme of 2019, marked by the dissemination of stringent privacy regulations across the world and a crackdown on big tech and ad targeting, this did not stall agency investment in database companies, with data and analytics a common theme in M&A activity this year.
So without further ado, here's a breakdown of the top M&A deals this year in the marketing world:
1. Read makes his mark on WPP: sheds Kantar to simplify structure
Acquirer: Bain Capital
This was Mark Read's first year leading the charge at WPP following the swift exit of founder Sir Martin Sorrell in April 2018. Read immediately put into action a "radical" three-year plan (announced December 2018) to sell non-core assets and return the world’s biggest advertising company to growth.
The most significant divestiture arrived in July, when it agreed to sell 60% of its market research company Kantar to private equity firm Bain Capital. The US$3.1 billion transaction completed on December 5 and was the highest value single deal among holding companies this year, according to R3 data. Upon completing the deal on December 5 Read said the company's divestiture program is "substantially complete".
This year WPP also sold its minority stake in communications group Chime in July to majority shareholder Providence Equity Partners for £54.4 million (US$68.91 million); and its stake UK post-production company The Farm, in a deal that valued it at about £50m.
While undergoing its divestiture program, WPP was the least acquisitive holding company this year, only striking two deals—for InterMedia and Aquest—compared to the 15 acquisitions it made in 2018, according to R3 data.
2. The consultancies can do creative now
Agencies have been defending themselves against the growing might of consultancies for some years now, but this year their 'creative caveat' was seriously eroded. The argument used to go, that yes, consultancies have the business, data and strategic know-how to grow brands, but agencies are the original creators, successfully building brands through shiny ads for dozens of years, and creativity is increasingly key to standing out in the homogenised mass-market.
But in April, when Accenture bought venerable New York-headquartered ad agency Droga5—led by one of adland's most well-respected creatives—for the tidy sum of US$475 million this argument further crumbled away. Daniel Jefferies from Jeffries Consulting said at the time: "If the holding groups weren't worrying about consulting companies eating their lunch they should be now!".
Overall, Accenture made the highest volume of deals this year, according to R3's Holding Company M&A League, purchasing 14 companies with a total value of $1.25 billion.
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2019: The year in review
3. Databases remain popular investments, despite privacy regulation concerns
Acquirer: Publicis Groupe
As consultancies have been edging into agency territory, agencies have responded by acquiring technology and databases in a bid to offer clients the holy grail of data and creativity. Last year IPG struck one of the biggest deals of the year with its US$2.3 billion acquisition of database company Acxiom Marketing Services.
That was trumped this year by Publicis Groupe's eye-watering $4.4 billion acquisition of data marketing company Epsilon—one of the marketing services industry’s biggest ever deals, and the Groupe’s largest purchase to date. Publicis has argued the addition of Epsilon's first party database will help it offset the looming death of cookies, but the deal has been branded by some outspoken executives as a very expensive risk in an uncertain regulatory environment.
The mammoth deal means Publicis tops R3's M&A League list this year on a value basis, with four acquisitions in total, including the remaining 24.9% of Blue 449 shares it did not own from M&C Saatchi in the UK, as well as US marketing agency Rauxa and New Zealand media agency MBM.
4. Big data means increased demand for analytics
If you thought $4.4 billion was big, CRM giant Salesforce knocked this out of the park with its gargantuan $15.7 billion all-stock deal for analytics firm Tableau in June. It was Salesforce’s biggest ever deal, and is among the biggest enterprise acquisitions in history.
The addition of Tableau's analytics expertise forms part of Salesforce's strategy to diversify beyond pure play CRM software and into digital transformation. The deal came just one week after Google made a similar purchase in analytics startup Looker for $2.6 billion. The Tableau deal is also in response to Salesforce rival SAP's $8 billion acquisition of Qualtrics in November 2018 to build out its customer experience capabilities.
5. Dentsu remains acquisitive despite revenue headwinds
Acquired: Comunica+A, Ugam, Happy Marketer, Filter, Davanti Consulting, MuteSix, Redder Advertising, BJL, Ambient Digital Vietnam, Re:Production, EBP
Dentsu made the second highest volume of acquisitions this year with 11 purchases totalling $389 million—including six in Asia Pacific, according to R3 data. Ironically, while Dentsu Inc was investing in Asia, acquiring the likes of Singapore digital agency Happy Marketer and India-based data and analytics company Ugam, Dentsu Aegis Network was undergoing several waves of cost-cutting measures in Asia and beyond. Yesterday, Dentsu Inc revealed it was cutting around 3% of its global workforce to stem revenue and profit losses in its international business.
Other adland acquisitions
Former WPP boss Sir Martin Sorrell’s new venture S4 Capital continued to balloon with eight deals (although they are internally considered ‘mergers’ not acquisitions) including three in APAC: Melbourne-based BizTech, Korea-based Datalicious and Delhi-based White Balance.
Havas Group made six acquisitions globally totalling US$264 million, according to R3 data, including three in India: Langoor, Think Design, and Shobiz.
The sale of PR firm Teneo to private equity group CVC Capital Partners for $350 million is one of the highest value agency deals this year. Meanwhile Cincinnati-based Legacy Acquisition Corp’s deal with Chinese communications firm Blue Focus to publicly list a rebranded entity called Blue Impact, was also among the biggest agency M&A deals in APAC in 2019.