The digital media space has been the most dynamic for M&A activity in the first half of 2015 as the segment continues to evolve and increasingly become more attractive in terms of monetisation. Even Bristol corporate finance is getting in on the action, with digital marketing agency Fat Media acquiring Bristol-based Strategy Digital to create a business with more than 130 staff.
Mergers and acquisitions in the digital media space are accelerating, according to data from investment banking and strategic advisory firms. There were a total of 1,243 deals related to digital media, information and technology announced globally during the first half of 2015, according to Coady Diemar Partners, up from 1,000 during the first half of 2014. That represents growth in transactions of around 24%.
Meanwhile, data from LUMA Partners, a strategic advisory firm focused on digital media, tells a similar story for the US market. The company said it tracked a total of 134 digital media M&A transactions over the past six months, up from 99 during the first half of 2014, representing 35% growth.
Industry observers have predicted a shakeout in the digital media market for years, particularly in areas such as advertising and marketing technology where dozens of start-ups – often with seemingly undifferentiated services and limited scale – face the reality that there isn’t enough room for everyone.
There has been the birth and growth of a new form of media company over the last few years that is starting to dominate the deal space. It’s been a fundamental transformation in a very short period of time: we are a multi-platform world now that is mobile focused, millennial driven, and of course digital first.
Digital advertising is booming. As consumers have begun spending more time watching video over the Internet rather than traditional TV, advertisers followed the eyeballs. In the third quarter, for example, total US TV advertising rose 2.6% to $11.4 billion while total online advertising rose 22% to $8.7 billion, according to Michael Nathanson of research firm MoffettNathanson.
With advertisers wanting to use fewer vendors, Coady Diemar expect to see an increase of M&A activity around larger companies looking to gobble up smaller ones with specific services, as they attempt to become full-service providers.
This year has already seen some major deals in the online advertising space, most notably Verizon’s $4.4 billion acquisition of AOL. Elsewhere, Nielsen acquired advertising data company eXelate for around $200 million, and Vista Equity acquired a majority stake in media buying software firm Mediaocean. Meredith Corporation, the leading media and marketing company serving American women, also acquired Selectable Media in early 2015, a leading native and engagement-based advertising company.
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