Agency acquisitions are heating up—who's buying and which ones might be sold next
Specialists in ad tech, influencer marketing, design, performance marketing and AI may be up for grabs in 2024
By Brian Bonilla and Lindsay Rittenhouse | Published on January 29, 2024
That might seem like a lot, but—pardon the grammar—you ain't seen nothing yet.
Michael Seidler, founder and CEO of M&A advisor Madison Alley, said that despite appearances there has actually been "very low activity" in the ad sector, due in part to what he called a "perfect storm" of economic issues, general business caution, and the underperformance of agencies that made them less desirable for buyers.
"We're eagerly looking at fourth-quarter results and how the first quarter is turning out because, more than anything—even more than the interest rates—the biggest hurdle was that the supply of [strong-performing] independent companies was very limited," he said.
Seidler is among 21 executives who told Ad Age they expect the M&A market to heat up significantly this year. In particular, these industry insiders are expecting big moves from consultancies such as Accenture, Tata Consultancy Services and Globant, as well as holding companies, private equity firms and even independent agencies and networks such as Meet the People, Plus Company and MSQ.
Among the shops vulnerable to acquirers: Specialists in ad tech, influencer marketing, design, performance marketing and AI, distressed agencies now owned by holding companies, small creative agencies and any shop that can fill holes in an acquirer's agency portfolio to deliver what Andrew Essex calls "soup to nuts" service for clients.
"We are definitely moving into a bundling phase," said Essex, a former Droga5 executive who is now senior managing partner of Tata Consultancy Services' digital services business, TCS Interactive. "The client wants more than ever one throat to choke."
"The new throat they want to choke is an end-to-end offering, which is basically from the development to the delivery, from soup to nuts, from the creative concept to the CRM," he said. "That requires ingesting capabilities that you might not have and offloading redundancies that you do have."
Essex predicts that the industry won't look the same in two years. "It's not a trend," he said of the shift prompting the buying frenzy. "It's a fundamental secular reorganization of the business."
2023 Mergers and Acquisitions
January
March
April
May
June
- Serviceplan Group acquires minority stake in L&C
- Dentsu Creative merges six U.S. agencies
- CXO invests in Goodby Silverstein & Partners