| by Digital Gurus

Giants among us.
The impact of the digital buying spree

Giants among usGiants among us

While Olympic fever has gripped the nation, it’s a different kind of frenzy that’s got the digital world talking. In the last few months we’ve seen more digital buyout transactions than in the FA transfer window. So what does the future look like for digital talent industry?

A digital shopping spree among the big players is creating a breed of uber group, and causing a stir in the industry. From WPP’s recent acquisition of a majority stake in Fortune Cookie, to the Google’s buyout of Meebo and QuickOffice, we take a look at the impact on the digital talent market, and what it could mean for the future.

WPP on a digital mission
Summer has seen a flurry of buying activity, most notably by WPP with some key acquisitions, which should set them on a path to achieve their strategic goal of 40% of their revenue from digital.

June saw WPP take ownership of digital icon AKQA, and more recently Fortune Cookie (under the Possible umbrella). In 2011 over a quarter of their Group revenue came directly from the digital sphere, some $4.8 billion of their annual $16 billion turnover.

These are two very strategic acquisitions for the Group, not just in terms of digital revenue, but in terms of strength of offering for the full spectrum of digital business. Their strategy isn’t limited to the ‘traditional’ agency model either, another key investment they have made this year saw a $10 million round of funding for mySupermarket, an online shopping and aggregation service.

Consolidated digital offering with group strength and credibility
Their ability to offer a complete digital offering across traditional online, mobile and tablet will be of interest to many of the big brands who increasingly want to consolidate rosters and who want to capitalise in developing markets such as Eastern Europe – another key win for WPP with these latest additions.

Google adds significant strength to technology platform
Building on the launch of Google Plus and their strength and credibility in the online anywhere solutions world, Google has been busy shopping too. Most recently they acquired Quickoffice – a mobile device app already installed on 400 million devices. The news of this came just a day after the long rumoured announcement of their acquisition of online chat platform Meebo.

Impact on the digital talent market
With any buyout there tends to come a natural resettlement within the market place, creating temporary buoyancy in the digital talent space and a ripple effect across the businesses, other agencies, clients and individuals.

Less choice for candidates and clients – the super agency brings with it a group culture – as is natural. For candidates this means moving to another agency within can feel like not moving at all. Shared clients, culture, politics and a perceived lack of loyalty for wanting to leave can all impact on movements.

It can also mean less choice for clients wanting to shake up their creative, or reduce production costs; the latter especially is more difficult in a well-oiled digital giant.

Consolidation – bigger agencies, bigger groups, more disciplines together will lead to natural and intentional consolidation, streamlining of processes and costs. Within the market too, some of the smaller, independent agencies may struggle as clients seek one-shop to handle all their business.

A change for independents to stand out – there will always be clients and projects that demand something completely different. Or those that just don’t gel with the way a big agency works. Lower overall costs and independent non cookie-cutter approaches to projects and process create opportunities for independents – and the talent within them to shine.

Uncertainty and reluctance to move – big buys create a feeling of ‘wait and see’. People are wary of making a jump directly after a buyout. And with more rumoured, there will be a direct impact as a result of people not wanting to move in the midst of activity, and temporary recruitment freezes while new structured bed in.

More to come
The buying spree is not over. Not least because the major players have strategic targets – in the case of WPP, while they’ve made a significant step closer to theirs, there’s a way to go.

At the time of writing, rumours of a Publicis Groupe bid for IPG are rife, if this goes ahead, it will create a ripple effect – it will also put them ahead of Omnicom as the world’s second largest ad group…unless Omnicom land a big digital catch themselves.

A good indication of the state of the market
What this does show is that there’s money and work to sustain the size of these companies, now and projected. Then there’s the Olympic effect – more spend on advertising during and after…with a guaranteed post Olympic sponsorship frenzy, growing daily as the Team GB medal tally racks up.

So while there are big changes and a feeling of clinging to the side of the boat while the waves settle, the near future for digital is incredibly strong. The competition and recruiting needs of the uber agencies puts the focus on talent to raise themselves up a level as they look for future stars, and this is only ever a good thing for the market.

Farooq Mohammed
Digital Gurus

Digital Gurus
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