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Mergers and Acquisitions of Online Advertising and Marketing Firms to Increase in 2007 Finds AdMedia Partners Survey

Merger and Acquisition Activity Will Be Driven by Demand for Integration of Offline and Online Services, as Well as Implementation of Campaigns Across New Digital Devices

February 21, 2007 07:00 AM Eastern Time

NEW YORK--(EON:Enhanced Online News)--According to a new market survey of senior agency executives by investment bank AdMedia Partners (http://www.admediapartners.com), mergers and acquisitions of online advertising and marketing firms are expected to increase in 2007.

“We believe 2007 will be marked by transactions that facilitate integration of online and offline marketing services as well as by campaigns across digital devices like cell phones, PDAs and television”

The AdMedia Partners survey – Merger and Acquisition Prospects for Marketing Services and Internet Marketing Firms – shows that survey respondents expect:

Increased merger and acquisition activity by both strategic and financial buyers, with the only concern being the quantity of quality acquisition targets – creating premium valuations for such firms.
The most deal activity is expected to be in search marketing, analytics, mobile marketing and buzz/viral/guerilla marketing, closely followed by online lead generation and database marketing/CRM.
Valuation expectations for interactive marketing firms increased from 7x to 8x EBIT since last year. Valuations for marketing services firms increased from 6 to 6.5x EBIT, and valuation expectations for traditional advertising firms held at 5x EBIT.
87% of survey respondents expect to approach or be approached about an acquisition in 2007, and roughly half of the respondents expect to complete one transaction as a buyer or seller.
The U.S. holds the most growth potential for mergers and acquisitions of advertising and marketing services, though a strong minority believe Asia, with emerging markets China and India and a resurgent Japan, is the most promising. 25% of survey respondents expect to be involved in a transaction outside the U.S.

“We believe 2007 will be marked by transactions that facilitate integration of online and offline marketing services as well as by campaigns across digital devices like cell phones, PDAs and television,” said AdMedia Partners Managing Partner Abe Jones. “In addition, the Internet is causing a reexamination of how media companies reach consumers through evolving marketing services. Meredith Corporation’s recent acquisition of two interactive agencies, Genex and New Media Strategies, highlights this trend.”

Jones also noted, “The last three years have seen a burgeoning market for mergers and acquisitions in which many of the top independent offline and online agencies were acquired. As the number of quality acquisition targets has shrunk over this time, we are seeing acquirers either scouring the market for hidden gems or aggressively courting top independents.”

AdMedia Partners thirteenth annual report is based on a survey of more than 3,200 advertising and marketing services executives and private equity investors from across the U.S. and abroad. Respondents were made up of companies that operate in a variety of advertising and marketing services sectors.

To access a full length copy of the survey on marketing services and internet marketing firms, please visit the AdMedia Partners website: http://www.admediapartners.com.

About AdMedia Partners

Founded in 1990 by former advertising, media, and investment banking executives, the firm focuses on mergers and acquisitions, divestitures, balance sheet restructurings, debt and equity financing, valuations, and strategy consulting. AdMedia has provided transactional services and strategic and financial advice to the world's leading advertising and media companies. The firm’s industry knowledge and strong transactional skills provide the best outcomes for both buyers and sellers – the strategic value that AdMedia Partners brings to every assignment.

Notable recent transactions completed by AdMedia Partners include:

Representing Bonnier AB, a leading $2.9 billion international media company, in its acquisition of The Parenting Group and Time4 Media from Time Inc.
Advising word-of-mouth marketing agency New Media Strategies in its sale to Meredith Corporation.
Advising internet marketing agency Genex in its sale to Meredith Corporation.
Representing Medical Broadcasting, the largest independent interactive healthcare agency, in its acquisition by Digitas Inc.
Representing Impulse Marketing Group, an online lead generation and affiliate marketing company serving the financial services industry, in its acquisition by an undisclosed private buyer.
Representing Bonnier AB, in its acquisition of a major interest in World Publications, a leading producer of special interest magazines, trade shows and interactive media.
Representing The Glover Park Group, a leading independent corporate communications and public affairs firm, in its acquisition by Svoboda, Collins, a private equity fund.

If you have any questions regarding this survey, or any other related merger and acquisition topics, please contact:

Advertising & Marketing Services

Abe Jones

Managing Director, AdMedia Partners

Email: ajones@admediapartners.com

AdMedia Partners

444 Madison Avenue

New York, NY 10022

Phone: 212-759-1870