January 6, 2016

Study indicates big year for mergers and acquisitions in ad industry

Advertising and marketing companies are expected to participate in a lot of mergers and acquisitions in 2016.

Despite an increase in interest rates, a new industry study from AdMedia Partners indicated that mergers and acquisitions among marketing and advertising firms could increase in 2016. Currently buyers' interest remains high.

The study showed an uptick in interest over last year. In 2014, 40 percent of respondents said they would consider selling their business. This year that number has sharply risen to 54 percent. The study polled executives in the U.S. and overseas. 

AdMedia managing director Seth Alpert believes that companies are looking to stay competitive and the best way to do that is through a merger or acquisition. He cited low interest rates and strong valuations as to why he believes "it's a good time for both buyers and sellers."

"On the part of buyers, there's a recognition of all the things that are changing, and the way to deal with that, and to remain competitive, is to augment their capabilities," Alpert said. "And the fastest and perhaps safest way of doing that is acquiring a company that's doing what you aren't doing, and doing it successfully."

The types of businesses most likely to strike a deal are analytics, digital, social and custom content/native advertising sectors. This isn't surprising considering 74 percent of respondents believe digital will represent 40 percent or more of their business in two years. They also expect mobile to grow.