Adgully turns 3 | Top 3 surprising agency (M&A)'s

The advertising world has always been buzzing with consolidation activity, where smaller firms get gobbled up by larger firms. However in the recent times, the pace of mergers and acquisitions (M&A)'s have been quite noticeable. The growth of social media and digital marketing has further accentuated this drive as established agencies with negligible presence rush to strengthen their footprints in the new media. On the occasion of Adgully’s third anniversary, the team sets out to place some of the most surprising acquisitions of the recent past. Some of the recent ones which come to notice are the Google’s recent acquisition of social marketer Wildfire, the Japanese advertising giant Dentsu buying out UK based Aegis group and the takeover of Taproot Communications by Dentsu back in India.

 

 

There seems to be a definite rationale behind the buyouts. In the case of Google’s takeover of Wildfire for $ 350 million, Google will be able to further round out their marketing solutions for thousands of companies across Canada and the world. Wildfire is best known as a popular and effective series of third-party social media marketing solutions for gaining brands larger social media presences. A majority of North American businesses in the small to mid-enterprise category are two to four years behind in terms of trying to sort out where to put very limited marketing resources. The digital marketing agency growth is strong across the board because digital marketing is growing so fast that even fairly large and sophisticated marketing departments need help in certain campaigns or areas of expertise. In a big picture sense therefore, the Wildfire acquisition by Google is another indicator of just how fast the world of digital marketing and online marketing is moving.

 

On the other hand after being the leader in advertising in Japan and the fifth largest in the world, Dentsu Inc acquired the UK based Aegis Group in a deal worth $ 5 billion last month. Dentsu which has been lagging behind its competitors on the global stage now wants bigger slice of the global market. The buy will enable it to triple its overseas revenue. The move was thus born out of necessity. As ad spending declines in Japan, Dentsu’s 61-year-old president, Tadashi Ishii, must look abroad to increase revenue. Before the Aegis deal, just 14 per cent of Dentsu's revenue came from outside the country. Dentsu abandoned a separate tie-up with an overseas partner earlier this year, in February selling a minority stake in French giant Publicis Groupe after a decade-long alliance failed to deliver expected returns. Dentsu feels that its objective is to provide better and unique services to clients globally. Acquisition of Aegis is the best option to achieve its goal.

 

Further since Dentsu generates majority of its revenues in Japan, not many people know of its presence outside the country, especially in the U.S., Europe and parts of Asia. Looking at the next five years, there are two important issues that Dentsu wanted to address. One is turning digital marketing into a core business and the second is expanding in emerging markets, focusing on Asia.

 

When the idea is to focus on Asia, how can India be ignored? So what does Dentsu do next? It goes and acquires a 51 per cent stake in Taproot Communications. The three year seven month old Taproot has been in the limelight off-late for several of its popular campaign’s like  'Har Ek Friend Zaroori Hota Hai' and 'Joh Tera Hai Who Mera Hai' for Airtel and 'Change the Game' for Pepsi.  Having witnessed  a meteoric rise, Taproot also won critical acclaim; the most recent being a Gold Lion at Cannes along with Ramesh Deo Productions for the 'I Am Mumbai' film for Mumbai Mirror, a newspaper from the Times Group, which also publishes The Economic Times. What further tilted the balance in Taproots’ favour was the very entrepreneurial and evolving; style of working and out of the box thinking.