Equiteq’s Big Deal Insight

New M&A trend: Traditional consultancies buying up creative agencies

Latest M&A trend


Creative BorderDeloitte’s recent acquisition of San Francisco based advertising agency Heat, is further evidence of the convergence of two very different business models: creative media and consulting. We’ve been tracking this developing theme for quite some time. Not only is it driving significant transactional activity, but more importantly it indicates a broad and pervasive shift in how business is being done.

It’s another example of traditional consulting and tech firms buying into creative. Deals like this now abound in the current M&A market. BCG bought Brighthouse last year, McKinsey acquired LUNAR Design, IBM has been active, so has Accenture who bought the digital content agency Brightstep in Sweden, and we’re constantly hearing from the large buyers about their desire to acquire in this space.

 

Why would traditional tech and strategy houses make the leap into the creative agency space?


Fundamentally, it’s about growth and protecting relationships. There is always a strategic mandate to capture more client spend, so finding ways to be relevant to another C-level exec, like the CMO, enables the large players to earn more wallet share from their big, multinational clients.

But that isn’t the whole story. There are underlying changes in how business is being done, primarily driven by technology, that are creating huge opportunities and risks for traditional players. The lines between marketing, technology, business operations and analytics are blurring:
Media

  • How consumers interact with companies and brands (code for how they make money!) is becoming more and more about technology. Personalized interactions with technology are defining more and more of the “customer experience”. It’s rapidly evolving, distributed and multi-channel.
  • Social media and mobile continue to tear down old modes of interaction and drive the invention of new modes.
  • Networked devices and applications are increasingly delivered to consumers in new and evolving ways, as they directly interact with companies and brands, in the store, on the street, at the restaurant!

So to protect relationships and capture more share of wallet, the traditional marketing firms who are good at ideas, need to be able to deliver technology solutions, and the traditional consultants who deliver solutions, need to be able to propose the creative solutions.

Couple this with the increasingly specialized skills required to stay current in a rapidly evolving technology environment and you have all the makings of a strong acquisition imperative.

 

Equiteq Edge


Equiteq Edge
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