Blog Post

Jordan, Edmiston: M&A Activity In Ad Market Will Surge Through End Of ’11

The deals just kept coming in the first half of the year and thanks to increasing competition in the advertising agency and digital marketing businesses, the continued growth of social media and the need for analytics to make it all work, the next six months should resemble the previous ones, according to The Jordan, Edmiston Group, Inc.’s tally of media M&A activity this year.

Highlights from the report:

— Buyers spent $23 billion in 1H 2011. That’s a 15 percent gain over the same period the year before, on a similar volume of M&A deals. The first half of 2010 produced a 61 percent surge in deal volume and a nearly four times increase in deal value over recession-weakened 2009 M&A activity.

— Interactive, marketing services and technology markets continue to account for the majority of deal activity and value. The B2B and B2C Online Media & Technology, Marketing & Interactive Services, and Mobile Media & Technology sectors made up 71 percent of total deals and 63 percent of deal value in the first half of 2011.

— Digital agencies ($806 million worth deals in aggregate) did 22 deals in the first half of the year — the most of any other category. Social marketing ($250 million) was next with 17, followed by 15 each for ad agencies ($827 million) and “data & analytics” ($473 million).

Despite the economic uncertainty, there are two reasons to expect more of the same for media M&A through 2012: major media companies, from ad agency holding companies like WPP Group and Publicis Groupe are constantly looking to expand their analytics and other digital capabilities, while extending their global reach as well.

Secondly, JEGI points out that private equity firms have over $400 billion in cash to put to work in the marketplace via the acquisition of both platform companies and add?on acquisitions to existing platforms. In addition to providing the wherewithal to do more deals, the values of doing a transaction are likely to keep pace with demand of both PE firms and media companies to capture “the next big thing,” especially in social and mobile. Release (PDF)