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i-Agency M&A Looks Promising

January 19th, 2010 8:31AM by Ronald Wagner

2008 – 2009 saw few interactive agency deals…mainly acquisitions of specialized (social media marketing, analytics, etc.) agencies and some subscale companies looking to be part of a bigger story. Due to the confluence of factors including an improving economic backdrop, increasing ROI focus from CMO’s driving agency service demand, and the capital that has been sitting on the sidelines getting more restless, 2010 is shaping up to be a good year for i-agency M&A. We anticipate that some mid-size players in the $15mm to $40mm revenue range will be active in looking to consolidate, and some larger independents will continue to seek private equity funds to expand transactionally. This all bodes well for a much broader base of prospective interactive agency targets. 2010 should be a great M&A year for the space.

i-Agency M&A Sheds Light on New World Order

August 8th, 2009 1:01PM by Ronald Wagner

Several interactive agency acquisitions over the past year have involved online agencies buying expertise in offline media. Why? Because as the Internet increasingly becomes the hub for consumer interaction and transaction, interactive agencies — especially those with strategy and planning chops coupled with the analytics and reporting functions so critical to cross-channel measurement – are similarly being called on to help guide the overarching marketing strategy for companies. The new world order?!

Internet Share of Ad Spending Increasing

July 7th, 2009 12:57PM by Ronald Wagner

ZenithOptimedia, part of Publicis Groupe: The Internet has performed better than expected this year, Zenith raised its forecasts from 8.6 % to 10.1 % growth this year; by 2011 Internet will have a 15.1% share of advertising spending, from 10.5% last year.

The natural migration of money flowing to media where consumer are spending their time continues. If Zenith’s report is even close, we are talking about a sea change over a very short period (2009 – 2011) that will put some air into the sails of a lot of Internet marketing firms. While display advertising as a share of Internet has dropped (PriceWaterhouseCoopers: in the U.S., display-ad spending is expected to drop to $4.4 billion in 2013 from $4.8 billion in 2008), we expect performance marketing spending as a category of Internet spending to continue to increase dramatically. We also see a shift in venture interest away from purely ad-sponsored models, which should provide additional focus on other practical models.

The Golden Age of Online Marketing

December 15th, 2008 5:56PM by Ronald Wagner

Despite writing this during the marketing spending doldrums of a cold 2008 winter, I am equally warmed by hot chocolate and a heated optimism about the future of online marketing. In fact, similar to those who feel there are unequalled investment opportunities to be had during this recession, I believe that from this economic shakedown the online marketing sector is going to emerge stronger than ever, creating a Golden Age of Online Marketing.

Data from Q4 2008 shows that online spending slowed along with other media spending; however, investment in online marketing is still on the ascendant (albeit at a slower rate than over the past several years) while other media – particularly traditional media spending – has seen serious declines. By all accounts, 2009 will be a rough year, but through this turmoil I believe the online marketing space will continue to gain traction as the core of marketer strategic focus (and thus, a magnet for marketer spending). In fact, the decidedly oppressive economic backdrop against which this process is taking place actually plays well to the online marketing sector’s historical causes célèbre: better, more measurable marketing programs with clear ROI and immediate impact. So, when CMO’s do take their feet off the spending brake sometime next year (I just knocked on wood), the acceleration effect on this sector will be tremendous!

In addition to the decade-long, broader natural ‘balancing’ of spending across media, where money continues to chase eyeballs, the Internet will further establish itself as the “hub” of marketing focus and expenditures simply because it is uniquely online where companies’ dialogues with customers and prospects increasingly takes place. Per this power position, online marketing firms will increasingly drive client strategy, control brands, and lead trends…thus, as direct beneficiaries of all of the above, the players in this space will enjoy their Golden Age!

Note to Digital Agencies: Strategy First

November 2nd, 2008 10:13AM by Ronald Wagner

After having advised several clients seeking to acquire digital agencies I have seen a desire among buyers to pursue firms with strong strategic capabilities. For an acquirer, the advantages inherent to companies that offer digital strategy capabilities include a higher-level client relationship, higher margin revenues, an ongoing stream of new business opportunities created via strategic recommendations, and of course, smart talent. I’ve previously built such a “digital strategy” group and core offering at two different interactive marketing firms to date (blatantly changing one company’s tag-line from “digital marketing services” to “digital marketing strategy and services” to reflect the clear forward focus on strategic partnering with clients), and therein bore witness firsthand to that empowering element, which is now more centrally a decision-turning factor among acquirers in the digital marketing services space.