Agency holding companies are gobbling up search agencies. They snagged coveted companies, signing the best deals to create memorable and mind-blowing campaigns that reap real business results for brands. The media, information, marketing and technology sectors saw 1,128 transactions worth $94 billion deals announced in the first three quarters of 2014, per a report released Thursday.
Deal volume rose slightly compared with 2013, but Facebook's $19 billion acquisition of mobile messaging app WhatsApp in Q1 and several other mega transactions drove deal value to more than double the $45 billion in 2013, according to The Jordan, Edmiston Group (JEGI), an independent investment bank specializing in M&A advisory services.
Independent doesn't necessarily mean independent. JEGI represented RKG (Rimm Kaufman Group), in its sale in July to Merkle, a privately held agency and data-driven customer relationship marketing (CRM) firm, for an undisclosed sum.
There were a few other search deals in the quarter represented in the Marketing Services & Technology sector. Dentsu Aegis Network announced in September an agreement to acquire San Diego-based Covario's search and content marketing agency business. Dentsu will roll Covario into iProspect. Earlier this year, Walmart Labs, Wal-Mart's tech arm, acquired Adchemy.
Agencies making headway in search marketing, mainly because they do a good job of tying search to other media like television, mobile or video include DigitasLBi, Havas, Resolution Media, Maxus, Performics, iCrossing, along with remaining independents supporting search like Elite SEM, 3Q Digital and PMG. They not only tie search to other media, but can attribute the media contributing to the conversion or sale.
"Expect to see more consolidation in the search engine marketing space, as companies look to create solutions that can leverage data and insights from search into other channels and vice versa," said Aaron Goldman, CMO at Kenshoo.
As we learned from IgnitionOne, M&A activity isn't a one-way street. It's been a little more than a year since IgnitionOne split from Dentsu, which acquired the company, along with 360i and Netmining in 2010. As part of the buyback deal, IgnitionOne and Netmining became an independent, privately held company, while 360i, which does more traditional agency work, remained with Dentsu.
B2C online media and technology was the third most active sector in deal volume through September, with 135 transactions, but volume fell 20% vs. 169 deals in the year-ago quarter. Deal value rose to $14.4 billion, due to Cox Enterprises' $1.8 billion acquisition of a 25% stake in AutoTrader Group in January; Priceline's $2.6 billion acquisition of OpenTable in June; and Gannett's acquisition of a majority stake in Classified Ventures, valued at $2.5 billion, in August.
Amazon made a $970 million investment to acquire Twitch Interactive, a video platform and community for gamers; News Corp spent $950 million to acquire Move, an online network of Web sites for real estate search that brings consumers and realtors together to facilitate the sale and rental of real estate in the U.S.; and Apax Partners acquired a majority stake in Answers Corp., an online community with answer-based search services, valued at $900 million.
Do you work at a search agency that deserves the title Search Agency of the Year? Drop a note to Joe Mandese, editor in chief at MediaPost, to submit your nomination.