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Summary:

With the concept of the one-stop shop currently en vogue among ad players, niche digital firms are looking to make deals that expand their b…

With the concept of the one-stop shop currently en vogue among ad players, niche digital firms are looking to make deals that expand their breadth. Adweek takes a look at two well-capitalized and rapidly growing players, AKQA and iCrossing, and the types of deals they’re currently hunting for, as they seek to move beyond their core market. Both companies have already been active on this front.

SEM firm iCrossing has acquired several smaller players in the last year, including Newgate Internet, Spannerworks, though neither lead the company far astray from its core business. But with a recent $62 million raise from Goldman Sachs and others under its belt, the company is looking to make search marketing the underlying core of a more expansive business. After that round, the company acquired web-design firm Proxicom, giving a hint to where the company is headed. CEO Jeff Herzog believes the company can build a bigger business from SEM just as Google (NSDQ: GOOG) is trying to build something much bigger off of search: “Search is customer intent…if you know how somebody searches, you know how they think. If you know how people think, you can brand to them effectively.”

AKQA is going in the other direction. The company started off as a web-design shop, but is looking to hone its technical chops, as it looks to offer analytics and SEM. In February the company sold a majority stake to PE firm General Atlantic, valuing the company at $250 million. Much of this money went to pay off previous investors, but the company is now all set in terms of war chest. In August, the company paid less than $10 million for search marketer Searchrev and it’s safe to expect a number of other deals, as it looks to roll up a full-sized firm that’s ready to go public.

Both of these companies may end up looking like each other and they face similar challenges. For one thing, they have to avoid overpaying during a time when digital ad assets are red hot. This is complicated by the fact that a number of ad firms are pursuing the same strategy. And then, as they find the deals, they’ll have to stay adept at integrating these buys into a cohesive unit. And what happens when the pendulum swings back to niche, best-of-breed shops?

  1. Hi Joseph…good article. I posted some of my thoughts and a link back to you on a blog post entitled, "Integrate or Specialize as an Agency?" here: http://blog.balihoo.com/index.php/2007/11/20/integrate-or-specialize-as-an-agency/

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  2. Agree with Shane, a good article, however as someone directly involved in the AKQA / SearchRev deal and building the European SearchRev operation, I need to put the record straight and say that whilst the final sale price was not made public it was considerably north of $10m. This figure of less than $10m (originally quoted in the WSJ) actually referred to SearchRev's annual revenues.

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