Global advertising network WPP has shown a noted slowdown in M&A activity as its chief executive Mark Read restructures and consolidates the offering into a simpler product for clients to navigate. According to research from Results International, the group made 15 acquisitions, down 50% on 2017.
Dentsu put through 31 deals, making it the most active buyer. WPP checked in at second and consultancy Accenture was third with nine deals in 2018.
Full-service digital agencies were the most desired marcomms acquisitions in a year where overall deals increased by 4%. Of 882 M&A deals globally, 126 were for full-service digital agencies, more than any other category. After a slow start, the M&A hit a two year high in the final quarter, perhaps foreshadowing high activity Q1 2019. Integrated (72) and website UX and build (71) agencies were second and third most sought after.
Media clocked in at fifth, coincidentally the volume of deals grew by a fifth year-on-year. This was driven largely by programmatic and OOH activity. The takeover of the APN Outdoor Group by JCDecaux and the Adshel Street purchase of oOh! Media in addition to S4 Capital’s second acquisition MightyHive, were prominent movements in the space.
Almost a quarter (22%) of all marcoms deals completed globally this year were private equity-backed, representing a 79% increase from 2017.
On consultancies encroaching into the marcoms space, they accounted for 23 of 882 deals. More than half of these (12) were pushed through Q4 2018.
In the fourth quarter, deals for content agencies more than doubled. Prominent moves were Eleven Inc joining Vision 7 Communications, Cognizant snapping up Mustache and IPG agency Golin acquiring Singapore’s Hurrah Production.
It found that North America was the most active region with 377 deals completed. Q4 2018 was the busiest in the UK since Q3 2016 with 40 buyers.
Julie Langley, partner at Results International, said noted an increased interest in in-house offerings – particularly around former WPP chief Martin Sorrell's new venture S4’s acquisition of MightyHive.
“This trend could be viewed as an effort to better compete with consulting firms that are used to on-premises work. It could equally be seen as a reaction to brands increasingly taking certain functions in-house: this strategy is also apparent in the majority stake taken in Inside Ideas Group, home to in-house agency Oliver, by You & Mr Jones earlier this month.”