Partners at Green Square, Corporate Finance Advisors to the media and marketing sector, cast their eyes over the latest industry deals and look ahead to the next tranche of acquisitions.
Since the beginning of the year my partners Tony and Andrew, as well as myself, have been commenting on a busy M&A market. However, more recently the activity seems to have jumped up yet another level, with no less than 13 major deals appearing on the Green Square “Deal Monitor” in just six weeks.
It seems that with – for many – the start of a new financial year (1 April), acquirers have gotten hungry all over again.
Of all the shoppers, Aegis – now part of the Dentsu world following its acquisition by the Japanese ad giant in March – seems to have been the busiest.
In April, it acquired – for an undisclosed sum - 100% of Beijing Wonder Advertising Co., Ltd (better known as WonderAd). WonderAd is a digital planning and buying agency specialising in China’s fast-growing online gaming industry, but also has eCRM and performance marketing capabilities. Based in Beijing, WonderAd also has offices in Shanghai and Shenzhen.
It’s easy to see why Aegis bought WonderAd. Firstly, it gives the company a foothold in online gaming; secondly, it will be aligned to Aegis’ media outfit Carat and, as a result of this acquisition, Carat will move towards becoming one of the leading digital media buyers in China, adding power to Aegis Media’s digital media trading platform which now includes Carat, Isobar, Vizeum, Catchstone and OMP. It will help Aegis to compete on a better footing in the region with the much larger WPP, Publicis and Omnicom.
WonderAd, set up just 10 years ago, employs over 200 staff and is a leading player in China. It has a sophisticated technical offering, integrated digital media planning and execution capabilities and has – this is key, I think, given the increasing importance of data - built a comprehensive database of online media buying data.
Its key gaming clients include SNDA, Tencent Gaming, NetEase Gaming, RenRen Gaming and Perfect World, but it has also been going after non-gaming clients in the Middle Kingdom, with a good deal of success. Non-gaming clients – in financial services and retailing especially - now comprise more than 30% of the business.
Aegis, like Publicis, has long had a strategy of acquiring “high quality digital assets” in the East. The agency appears to have a strong management team, excellent performance technology and capabilities, and a growing client base.
But it isn’t only in China that Aegis has been busy buying. Earlier this month it snapped up nvi, described in the publicity as “a market leader in performance marketing strategies in Canada.”
Most Drum readers will be familiar with performance marketing in its “affiliate marketing” guise; affiliate marketing – like all performance marketing - rewards one or more “affiliates” for each visitor or buyer bought to a retailer, service or brand through that affiliate’s (or publisher’s) marketing efforts. In recent years the market has grown in size and complexity, leading to the proliferation of second-tier or third-party vendors and service suppliers, of which nvi is one.
nvi, which has offices in Montreal and Toronto, has a diverse client base including, Allstream, RONA, Club Med, Michael’s and Chapters/Indigo. It will join Aegis Media’s iProspect search and performance marketing network, expanding both brands throughout Canada – and then, one presumes throughout the rest of North and South America.
Most importantly for Aegis group CEO Jerry Buhlmann, the nvi acquisition will increase Aegis Media’s Canadian digital revenue by 15% and by as much as 33% in the fast-growing Quebec market. It would seem easy to dismiss these numbers – Canada may be the world’s second-biggest country, but it’s a bit of a minnow compared to the UK, US, Brazil and China when it comes to media and advertising spend. But growth often depends on the beginnings provided by smaller strategic steps, not just the big acquisitions. So it may be that Aegis will build on its performance marketing base in Quebec and Toronto and expand outwards to the rest of the continent.
After talking about Aegis so much, I can’t leave out that company’s great rival Havas. Over the past year its acquisitions have included mobile agency Mobext, social media specialist Socialyse and the design, build and customer experience agency Web Narrative.
Then, at the end of April it bought the marketing insight consultancy SCB Partners. The deal should enable Havas to create stronger connections between media channels by using SCB’s consumer behaviour intelligence capabilities, so it’s a good buy in terms of strategy. SCB has some great clients too - including American Express, Burger King, Coca-Cola, and Top Shop. Even better, it operates in a high-margin, increasingly important space: the agency claims to provide “access to trend-setters, opinion-formers and high net-worth individuals in order to anticipate trends and forecast human behaviour”.
SCB, which was founded in London in 2002 by Tammy Smulders and Alice Bamford, becomes part of Havas Media later this month. The SCB brand will be maintained, but its staff will move into the Havas Media building in London’s West End. Led by Smulders, SCB will report into Paul Frampton, the managing director of Havas Media.
Frampton said: "SCB invests in understanding people and their motivations, which will give Havas an advantage at a time when, arguably, platforms have overshadowed the importance of understanding people."
This is a crucial point – because, in an increasingly complex, data-heavy and media-saturated world, understanding why people do what they do, and predicting what they might do next, is absolutely critical to delivering effective marketing messages.
Barry Dudley is a partner at Green Square, corporate finance advisors to the media and marketing sector.
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