NEW YORK--(M&A firm AdMedia Partners, an overwhelming majority (81 percent) of senior executives at leading content, marketing services and marketing technology companies believe mergers and acquisitions by strategic buyers in the industry will rise in the coming year. At the same time, the survey found that interests in further expanding into “hot” areas such as mobile, analytics, social marketing and digital media have sobered from previous years. Nonetheless, the survey shows that mobile remains the area of greatest expected opportunity and a clear driving force behind continued change in the marketing and media landscape.)--According to a survey released today by
“At the same time, our eyes remain fixed on the economy. Congress will be the biggest wildcard and have a tremendous impact on all businesses, in addition to M&A activity for the media and marketing industry.”
“Most of our respondents seem to feel this will be a good year for both buyers and sellers, now that the election has passed and some uncertainty has lifted,” said Seth Alpert, Managing Director at AdMedia Partners. “At the same time, our eyes remain fixed on the economy. Congress will be the biggest wildcard and have a tremendous impact on all businesses, in addition to M&A activity for the media and marketing industry.”
Strategic buyers expected to experience most growth in M&A activity
Executives signaled an overall sense of optimism in the advertising, marketing services and media industries, and a corresponding healthy M&A environment heading into 2013.
- Most respondents (88 percent) at companies with at least $50 million in revenues said that they plan to seek an acquisition target in 2013.
- To fund these deals, 48 percent notably said that they would use debt, a dramatic increase from 27 percent last year. This possibly reflects the expectation that current low interest rates seem unlikely to change for quite a while.
While financial buyers remain significant players, their growth in activity is slowing as compared to strategic buyers.
- A little under half (46 percent) of those surveyed believe mergers and acquisitions driven by financial buyers will be up in the coming year, with just over a third (36 percent) believing that activity will be flat.
- This falls in line with a significant drop in reported interest from financial buyers in 2012, where the number of respondents who were approached decreased from 43 percent in 2011 to 26 percent in 2012.
The survey also found that the wisdom of whether to sell or buy has been steadily converging over time, signaling that 2013 is an equally good time for buyers and sellers to act compared to previous years.
- Just over half (51 percent) of respondents said they would advise sellers to act now, while 70 percent gave that advice to buyers – reflecting the narrowest gap between the two groups in five years.
Sobering interest in “hot” areas
Mobile, analytics and social marketing remained the top three areas of interest for expansion or acquisition by services firms. However, overall interest declined eight to sixteen percent points in each area since last year. This is perhaps a reflection of lessons learned or that these areas were actively developed during 2012.
The sector that lost the most interest was notably search marketing. Last year, 50 percent of respondents expressed interest in expanding or acquiring a search marketing business, whereas this year only 32 percent did so – likely a result of the maturing sector and the increasing importance of social media.
On the content side, the highest levels of interest in expansion were in digital media (69 percent), custom content (60 percent), app development (56 percent) and user-generated content (56 percent). As in the services sectors, there was an overall decline in interest across the board, with significant drops of thirty points in both online video (from 79 to 49) and information database publishing (from 66 to 36).
Mobile still the clear driver of change
Mobile retained its top spot as the area of greatest expected opportunity. Findings include:
- 67 percent of services firms say that they would consider acquiring or expanding into mobile – the most popular area of expansion/acquisition
- 25 percent say that mobile is the most disruptive industry trend, topping the list
- The most ad dollars are expected to migrate towards mobile, with four out of ten respondents expecting mobile advertising to grow at least 20 percent in 2013, compared to a median expected growth rate for interactive advertising of 13 percent and for advertising as a whole at 3 percent.
Findings show, however, that the monetization model for mobile is still evolving.
- The number of respondents who said their mobile content was free jumped considerably for both mobile devices and tablets – from 24 percent in 2011 to 40 percent in 2012 for mobile phones, and 22 percent in 2011 to 36 percent in 2012 for tablets.
For more information on the viewpoints of buyers and sellers regarding 2013 valuations, advertising spending, M&A activity, and key changes in content delivery, consumption and monetization trends, download and read our survey at http://www.admediapartners.com/research_and_commentary/industry_surveys/index.html.
About AdMedia Partners:
Founded in 1990, AdMedia is a leading M&A advisory firm serving the marketing services, advertising, marketing technology, media and information sectors. AdMedia has completed over 180 transactions for clients valued in excess of $8 billion since 1999. For more information about AdMedia Partners, please visit www.admediapartners.com.