Search: Does An Increase In Debt Signal Better Days For 2014?

by , Dec 13, 2013, 3:16 PM
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When companies increase their financial debt it typically means execs have confidence in the economy, according to a study released this week. Marketers can find that comment in the report titled "Global Transition In the Age of Digital Media" in the chapter about how media companies use their cash. A few insights in WeiserMazars's report elude to the health of the media industry in 2014.

The level of net debt media companies had on the balance sheet fell significantly after the financial crisis in the mid to late 2000s, and it wasn't until 2010 that the debt took a turn. In a downturn, media companies stockpile cash. It wasn't until 2011 that many started to feel secure enough to use debt to acquire companies and achieve growth. In the U.S., Internet companies in advertising and communications grew cash positive that year; their net debt and equity ratio, negative.

In 2013, the industry experienced a rebound of merger and acquisitions in the U.S., which began in the prior year. Advertising media and communications companies experienced the strongest growth in 2012. The report cites Pitchbook Data that suggest U.S. media companied completed $10 billion worth of M&A transactions in 2012, up from $4.6 billion in the prior year.

What does this mean for U.S. media companies in 2014? On the one hand, it's a positive sign based on the insight from the report -- yet if the company buys another based on cash it could mean the acquiring company lack the expertise and needs the technology.

"Growth is up and forecasts are optimistic," according to WeiserMazars. What does it mean if the company uses cash to acquire another, aside from it not going into debt? Advertising expenditures rose by 3.5% this year -- reaching $505 billion, according to ZenithOptimedia. The trend should continue into 2014. Emerging markets will lead the recovery, with a compounded annual growth rate forecast of 8.6% between 2012 and 2015, while mature markets should grow at 2.8%.

This year Google made some unusual acquisitions. It acquired Bot & Dolly, which makes cameras fixed to robots for use in Hollywood movies, and its sister company Autofuss, which Google has worked with on various advertising campaigns. The list goes on to include cloud computing to ecommerce to social predictions to GPS and mobile software to gesture recognition.

Microsoft acquired companies like Nokia's device business, API management platform Apiphany. While there have been a handful of strategic acquisitions for Microsoft, a new CEO will become the company's biggest change this year. Yahoo most recently acquired QuikIO. Last week it acquired Ptch. Reports suggest that Yahoo made 25 acquisitions this year.

comScore said Wednesday e-commerce spending from desktop computers the Monday, the one that fell 10 days prior to Christmas, rose 10% to $1.4 billion, making it the third-heaviest digital spending day of the holiday season so far. Cyber Monday was the heaviest online shopping day for desktops this year with more than $1.7 billion in sales, up 18% from Cyber Monday last year.

In November, Google sites led the U.S. explicit core searches with 66.7% market share, followed by Microsoft with 18.1% and Yahoo with 11.2% Ask Network accounted for 2.6% of explicit core searches, followed by AOL with 1.4%, according to comScore.

2014 could be a very good year for search engine marketing and media.

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