The popularity of mobile devices and social media has boosted the value of digital marketing agencies. While traditional agencies produce marketing and advertising campaigns for print, radio and television, digital agencies develop campaigns for websites, social media and mobile devices. The sub-sector has been active on the M&A front, with several strategic buyers on the prowl for targets.
Among the strategic acquirers buying digital marketers are: IBM (NYSE: IBM), Web.com Group Inc. (Nasdaq: WEB) and Accenture (NYSE: CAN). Buyers have been looking both in the U.S. and internationally for deals.
In February, IBM announced plans to acquire digital marketing agency Ecx.io, headquartered in Dusseldorf, Germany. The two companies say the deal comes during a time when customer service in e-commerce is crucial. Ecx.io serves clients such as fabrics distributor JAB Anstoetz. The move follows IBM’s pending purchases of digital marketers Aperto, based in Berlin, Germany, along with Resource/Ammirati in Columbus, Ohio. IBM has also been investing to grow its digital business organically. In 2016, the company opened design offices in Dubai, Prague and Warsaw.
Web.com has recently completed its purchase of Yodle Inc. for up to $342 million in cash. Yodle, based in New York, provides social media and search engine assistance to small businesses. Web.com in Jacksonville, Florida, offers website and online marketing services to businesses. The company says the purchase of Yodle will give it additional products, such as cloud-based software. “This market segment has been a strategic focus for us for several years,” says Web.com CEO David Brown.
Perficient Inc. (Nasdaq: PRFT) acquired digital marketing agency Enlighten in December. Based in Ann Arbor, Michigan, Enlighten provides website development and social media marketing services for clients such as Johnson & Johnson (NYSE: JNJ). Perficient helps companies with brand development on mobile devices and social media. Perficient recently helped sports apparel and equipment distributor BSN Sports develop an e-commerce website to assist BSN with online sales. BSN claims that about 40 percent of its web traffic now comes from mobile devices. As online shopping keeps making gains with consumers, M&A in digital advertising will rise along with it.