Execs Bullish On Meredith Buyout Of Digital Shops
- by Gavin O'Malley @mp_gavin, January 11, 2007
"There's no question we'll be seeing a lot more M&A activity focused on interactive agencies," said David Clark, a managing director with investment banking firm Jordan, Edmiston Group, Inc. "Especially from more non-traditional buyers like Meredith, because everyone needs interactive these days."
Wednesday, magazine publisher Meredith announced its acquisition of Genex, a top 50 interactive shop, along with New Media Strategies, a firm specializing in online social media and word-of-mouth marketing strategies. The deals followed Meredith's acquisition of O'Grady Meyers, a full-service interactive shop, last April.
Clark said the acquisitions make sense despite the fact that Meredith is far from a typical holding company. "We're big believers in industry conversions like Gannett's acquisition of PointRoll in '05," he said. "Meredith simply needed more of the right type of digital DNA so they could deliver new campaigns."
While cautious about the control an agency surrenders when acquired, executives saw the deal as generally positive for the industry.
"A deal like this raises the profiles of interactive agencies as yet another validation of the importance of interactive marketing," said Cary Savas, president of Omnicom's EVB.
But, added Savas: "The issue for shops is how much control they expect to have post-acquisition. Do they want to check out and get a paycheck, or do they love what they're doing and want to keep at it? It all depends."
Renny Gleeson, Wieden + Kennedy's recently appointed global director of digital strategies, further cautioned potential acquisition targets to consider how selling out might affect business. "How does the acquisition make your shop more relevant?" asked Gleeson. "Whether it's a large holding company or a magazine publisher, how much autonomy are they going to let a small shop have?"
Today, however, the allure of more recourses and a chance to pitch bigger clients might be too alluring for even the most independent shops.
Speaking of Genex and New Media Strategies, Clark remarked: "This is their chance to get a seat at the table, and access to Meredith-caliber clients."
