Survey: M&A Could Rise For Major Players, Trad Media Value Drops

New research indicates that M&A activity across the broad marketing landscape could soar this year, particularly for companies with revenues of $50 million-plus. The annual survey by AdMedia Partners found that 88% of those surveyed at companies there plan to seek an acquisition this year.

Survey participants suggested the value for traditional media companies would be significantly lower than in other sectors. Data shows 77% of respondents suggested value would be 5 times or less EBITDA, while in digital media 61% felt it would be 7 times or greater.
 
There may be a turn away from using advertising-only as a way to monetize content distributed via tablets. In 2012, 41% said they were pursuing an “ad-supported” model, which declined to 38%. There was a rise in those saying a “subscription” model from 24% to 29%. Still, free rose from 22% to 36%.

Those indicating that expanding globally was a reason for making acquisitions this year increased 31% to 38% versus 2012. The three leading disciplines where companies are looking to make acquisitions are mobile, analytics and social –- all garnering a response rate near 65%.   

Overall, 81% of respondents feel M&A activity by “strategic buyers” will increase in 2013. Indications are that companies will use more debt to make acquisitions this year.
 
Within the content arena, the survey found that interest levels for “expanding or acquiring” were highest in the areas of digital media (69%), custom content (60%), app development (56%) and user-generated content (56%).

Also, participants indicated that ad dollars in the mobile space would continue to increase, with 40% saying they expect it to go up 20%-plus in 2013. That’s compared to a 3% growth rate by one metric in advertising overall.

The 19th annual survey included 7,400-plus global participants working in advertising, marketing services, digital marketing, marketing technology, media technology, media and digital media, who took an online survey last November. AdMedia acts as an M&A advisor.
 
 

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