2013 M&A: More Big Deals, And A Flood Of Marketing Tech

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JEGI-2013Although marketing industry deal activity was flat in 2013, the sector saw some eye-popping deal sizes, according to boutique investment bank Jordan, Edmiston Group Inc.'s (JEGI) annual review of mergers and acquisitions.

In 2012, many of the biggest deals in 2012 tracked by JEGI involved consumer brands (Yahoo, Kayak), with only two marketing industry mergers coming in above $1 billion (Dentsu/Aegis and Nielsen/Arbitron). By contrast, 2013 saw a preponderance of large marketing deals. Among all the acquisitions JEGI tracks, four of the top five were in its marketing and interactive services (MIS) sector.

Overall, the marketing sector saw 479 transactions valued at $45.1 billion, according to JEGI. That represents a near doubling of last year's tally, an astonishing growth figure -- that is, until you realize half that value is attributable to the $21.9 billion megamerger of Publicis Groupe and Omnicom Group, announced in July and expected to close this quarter. With POG removed from the equation, the total deal volume and deal value in the MIS category looked about equal to the previous year.

Among the other marketing mergers to come in above $1 billion were Salesforce.com's $2.5 acquisition of ExactTarget, Oracle's proposed $1.6 billion purchase of Responsys and Clarke Holdings' buyout of Valassis ($1.9 billion).

Noteworthy here is the prevalence of "marketing tech" companies in the CRM, email, marketing automation and related categories (as opposed to ad-tech/display media deals). In addition to ExactTarget and Responsys, Adobe's $600 million Neolane buy was a notable example.

By contrast, 2012 arguably produced just one big deal in the "marketing tech" arena (Oracle's $871 million acquisition of Eloqua). So, more evidence that email and CRM are hot again -- while plain vanilla ad tech may be challenged.

"Marketing technology, connecting consumers to brand, using a lot more data that brands and publishers already have is a very promising area," said JEGI co-president Tolman Geffs, "whereas ad tech, scraping cookies with little overall contribution, isn't a very promising area."

Asked what deal types were conspicuously absent from 2013, Geffs added he was surprised not to see more M&A movement around retail-enabling technologies.

"I expected to see more in retail tech, and I think that's still going to happen," he said. "Retailers have so much potential, not just in offering ecommerce but in really digitizing the shopping experience. They are very smart business people but need a lot of help not just in adopting a technology but in re-engineering their own go-to-market processes."

One additional note: The avalanche of major acquisitions may belie an equal acceleration in small-time deal making. Since 2013's total deal value was on parity with 2012 at $20 million to $23 million (again, not counting POG) spread across about the same number of acquisitions as 2012, the preponderance of expensive mergers this year suggests a greater number of smaller deals at sub-$1 million or even sub-$100,000 price points.

JEGI doesn't itemize smaller acquisitions in its report, so it's not clear what types of companies sold in this range. Geffs said many of the deals are single purpose apps and niche websites, but the list also likely includes small ad networks, struggling ad-tech "point solutions" and regional or niche agencies and consulting firms.

JEGi-2013-chart

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