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A breakdown of M&A activity in marcoms during Q3 2016

Source: Results International

Consolidation in the marcoms space continued to grow during the last quarter (despite the wider business uncertainty fuelled by Brexit), with the third quarter of 2016 seeing 279 mergers and acquisition (M&A) deals generate over $1.77bn.

The findings come in a report by investment advisors Results International (RI), which points out that the number of deals in the sector grew sequentially (from 219 in Q2) driven by the widespread growth in agency networks’ desire to up their capability to put data and analytics at their heart of their practice.

Dentsu has been the most acquisitive party in the marcoms space since the beginning of 2016 with 34 purchases. 

RI raised Dentsu’s activity in the space over the surveyed period (12 deals in Q3, ahead of rival WPP which made seven such purchases), with the advisory company highlighting Dentsu’s purchase of performance marketing outfit Merkle in a deal reportedly worth $1.5bn (see chart above for breakdown of deals between Q1 and Q3 2016).

Full service digital agencies, as well as PR agencies have been the two most popular acquisition targets since the beginning of 2016 

Public relations agencies also proved a popular acquisition target during the period (see chart immediately above), with the investment advisors also pointing out the rising industry sub-sectors of virtual and augmented reality (AR and VR). Companies offering AR and VR media services are proving popular with some of the industry’s larger publishers, as they view such technologies as “the next frontier of branded content”, according to RI.

Meanwhile, it also said the total number of deals from the beginning of the year has neared 800 (see chart immediately below). Click here for more insights from RI.

Meanwhile, Julie Langley, a partner at RI, said the impact of Brexit on consolidation in the marcoms sector had yet to reveal itself, and also raised the increasing interest of management consultancies in the marcoms sector, with three big purchases from Accenture, and two from Deloitte over the third quarter.

Speaking recently with The Drum on the growing interest of management consultancies in the advertising space; Anatoly Roytman, EALA managing director at Accenture Interactive, said this was the result of “the world becoming more complex”, and that “consultancies must be much more strategic to meet their clients’ needs.”

Meanwhile, speaking at ATS London earlier this year, Langley also gave her opinion on consolidation in the adtech space, where she listed telcos and “new entrants” among the likely big spenders in the years to come when it comes to buying adtech companies.

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