The advertising industry should brace for more acquisitions similar to those seen in 2012, according to John Kaiser, managing director at investment firm DeSilva & Phillips. Among the highlights: Dentsu acquired Aegis Group for nearly $5 billion; IBM paid $1.3 billion for Kenexa; Nielsen paid $1.2 billion for Arbitron; and Microsoft paid $1.2 billion for Yammer.
While the first few months of 2013 may be off to a bit of a slow start, given the flurry of mergers and acquisitions in late 2012 for tax purposes, any shortfall early in the year will more than be offset as the year progresses, Kaiser said.
"With expectations for a slow-growth economy, strategic buyers will pursue acquisitions for new revenue streams to achieve corporate growth objectives," he said. "Financial firms that raised substantial sums during the past five years will need to put the capital to work."
Factors favoring M&A point to strategic and financial buyers with unprecedented amounts of cash and credit. Google states that as of Dec. 31, 2012, the company had unused letters of credit for approximately $89 million.
This year, companies will attempt to remove waste in advertising and marketing through M&A. Marketers will become more proficient in integrating media channels and sifting through data to target consumers with relevant messages.
Although there have not been many transactions in mobile, this will change as mobile becomes more valuable and the cost of ads rise, Kaiser said. Mobile and analytics were often cited as the areas to watch in 2012, but it’s expected that deal-making will span across digital creativity, social media, video, and marketing automation in the future.