It looks as though competition for marketing services assets is really hotting up in 2015. Adding to the warm and fuzzy effect of an improved economy, lifting the spirits and bank balances of the consolidators in the sector, is the huge increase in appetite that we are seeing from businesses outside of the sector.
This is not an entirely new phenomenon. The strategies of printing businesses like St Ives and Communisis to diversify out of declining markets into higher value-add marketing services demonstrated some time ago that this was a market that could be attractive to many. This theory is extending, however, to other areas of the TMT landscape.
We have seen integrators like Accenture build up a serious digital presence with acquisitions such as that of Australian digital business Reactive Media and, more recently, Capita has got in on the act. Earlier this month, it announced the acquisition of ThirtyThree – an employer branding and marketing agency – for an undisclosed sum. And when Capita get in on the act, you know there will be more to follow -both from the business itself and from others closely watching its acquisition model. Interestingly, I also had a conversation with one of the mid-tier Indian IT integrators this morning who wanted to chat specifically about their intentions to acquire in digital marketing services business including consulting, web development and analytics.
This increasingly converged landscape is leading to appetite from corners that we might not have anticipated six months ago and is going to make for a really interesting M&A market this year.