• by Joe Mandese  @mp_joemandese, January 29, 2008

Aegis Group, whose Isobar network already is the largest digital media services group in the world by a wide margin, is looking to get bigger. And it's looking to do so in one of the online industry's biggest markets: the U.K. Aegis is a leading suitor poised to acquire i-Level Ltd., a London-based interactive agency founded in 1999, The Daily Telegraph reports.

The paper said U.S.-based AKQA is another potential suitor for i-Level, which has retained Ingenious Media Active Capital Ltd. to advise on its strategic options, including a sale that could fetch upwards of $200 million.

The sales would come at a time when there appears to be a feeding frenzy for digital advertising services assets, despite the potential slowdown in the economy and advertising spending. According to a survey of industry executives conducted last month by U.S. investment banker AdMedia Partners, "valuations remain robust" for advertising related mergers and acquisitions, despite the economic slowdown.

"While respondents are concerned about a potential slowing of the U.S. economy, they are optimistic about their own companies and feel that major events in 2008, such as the U.S. Presidential election and the Olympics, will drive advertising spending and the demand for marketing services," the firm said in a summary report released Monday.

The report estimated that digital marketing services agency acquisition deals are now fetching multiples of eight times EBIT (earnings before interest and taxes), which is a recent high and is 60% greater than the five times multiple estimated for traditional advertising agency deals.

The lofty valuation comes no doubt from the fact that there aren't many digital agencies of significant scale available in the market, following last year's breath-taking deals, including Microsoft's $6 billion acquisition of aQuantive, Publicis' $1.3 billion takeover of Digitas, and General Atlantic Partners' hefty equity stake in AKQA.

Aegis, meanwhile, has been on a tear gobbling up smaller digital assets across the globe and amassing the largest digital media services network, bar none. According to RECMA's first ever report on interactive agencies last year, Aegis' Isobar network employed 1,400 people worldwide as of June 2007, about 28% of the global digital advertising services workforce of the Big 6 agency holding companies. And it's gotten bigger since then, making numerous acquisitions, including Helsinki-based White Sheep just a few weeks ago.

Since billings have become an arbitrary and virtually meaningless benchmark in comparing the size of digital marketing organizations, staff size has become the relevant benchmark for industry comparisons. According to i-Level's Web site, the company currently has a staff of 140 employees.