Marketing sector M&A and fundraising activity: Q1-Q3 2019, was driven by Marketing & Sales Technology and Adtech deals (up 52% in aggregate versus the same period last year), whereas the number of deals in marketing services was strong but flat (636 versus 634 in the first nine months of 2018). There were 1,057 global deals in total from Q1 to Q3 – up 16% on the same period in 2018.
The headline deal this quarter was, of course, Bain Capital’s acquisition of Kantar Media for $4 billion – part of WPP’s continuing restructuring and refocusing plan. Other large deals worth mentioning include Vista Equity Partners’ acquisition of Acquia for $1 billion, Blackstone’s acquisition of Vungle for $750 million and Veeva’s $430 million purchase of Crossix.
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‘Advertising & Creative Agencies’ was the most active marketing services subsector in Q3. Within advertising & creative agencies, more than half of the deals were in the full service and integrated agencies. 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 Sales Technology’, marketing automation, content production and syndication, and data unification continue to be the most active subsectors. This highlights brands’ and marketers’ ongoing need for speed and highly personalised customer engagements.
Email marketing also saw eight deals this quarter, making it one of the top sectors within marketing and sales 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 at Results International, comments: “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.
In 2019, we are also seeing the end of consolidation within the DSP space in our data on marketing sector M&A and fundraising activity. 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 IgnitionOne’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 $615 million.
For the first nine months of marketing sector M&A and fundraising activity in 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 adds: “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.”
* Martech defined as sales & marketing technologies, ecommerce technologies, websites creation & optimization.
** Adtech (defined as search and advertising technologies).