Ad Industry M&A Investors Spend $32 Bil, Digital Soars

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There's no shortage of money for companies innovating in the marketing and digital advertising space. Business-to-business and business-to-consumer, Online Media & Technology, Marketing & Interactive Services, and Mobile Media & Technology accounted for 79% of total merger and acquisition deals.

That's 75% of deal value for the first half of 2012, according to a report by Jordan, Edmiston Group, an independent investment banking firm.

The M&A report released Thursday found that investors spent $31.7 billion -- up from $21.2 billion in the first half of 2011 -- primarily due to a few multibillion-dollar transactions, with the balance of market activity centered around mid-size transactions.

About 95% of transactions in the first half of 2012 were valued at less than $100 million. Only five deals exceeded $1 billion, including Alibaba Group's 20% share pending acquisition from Yahoo for $7.1 billion, and the $3.3 billion buy-out of TransUnion by Advent International and Goldman Sachs.

Most deals in the first half of 2012 took place across the interactive, marketing services and technology markets. Advertising agencies accounted for a combined 34% of the deal volume and 26% of the deal value in the Marketing & Interactive Services group.

New opportunities through social and mobile, as well as an aggressive push by IBM, Oracle and Adobe into digital marketing, encouraged M&A activity in Marketing & Interactive Services, the sector accounting for 40% of all transactions and 27% of total value in 1H 2012.

The Marketing & Interactive Services sector experienced one transaction at more than $1 billion in the first half of 2012. Microsoft acquired Yammer -- a provider of social networking portals for enterprises -- for $1.2 billion, but there were two deals at more than $500 million, and seven more with values of $200 million and higher.

Marketing technology deals accounted for 37% of the Marketing & Interactive Services deal value, led by Salesforce.com's acquisition of Buddy Media, which helps companies manage content across social media platforms, for $745 million.

Others in the first half include Intuit's acquisition of Demandforce for $424 million, and Oracle’s acquisition of Vitrue for $300 million. Ad and digital agencies combined accounted for $2.2 billion of deal value in 1H 2012, led by WPP’s acquisition of digital agency AKQA from General Atlantic for $540 million.

Mobile Media lagged at No. 3 in the first half of 2012, with 73 announced transactions totaling $2.8 billion. These transactions ranged from Facebook's acquisition of Instagram, one of five mobile deals in the quarter that included Face.com for $60 million, and Karma Science for $80 million, as well as Tagtile, Lightbox and Glancee.

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