M&A dollar volume drops 26% in first half

Share this article:

The transactional dollar volume for the merger and acquisition activity in the marketing, advertising and digital media industries declined 26% during the first half of 2008 for a total of $19.7 billion, according to investment bank Petsky Prunier's Deal Notes.

There were a total of 398 deals during this period, up 21% compared from last year, with venture capital investment representing 50% of the activity.

Petsky Prunier examines seven segments in its quarterly analysis: interactive advertising, advertising and promotion, out-of-home and specialty media, marketing technology, digital media, information and marketing services.

In the interactive advertising segment, the total number of transactions declined 8% and total transaction dollar volume was down 84%. However, last year's first half numbers were skewed by several mega-deals including Google's acquisition of DoubleClick and Microsoft's purchase of aQuantive. Within this segment, interactive agencies, ad networks and online lead generation companies were responsible for 59% of the deals and 71% of the dollar volume.

The biggest deals included Cox Enterprises acquisition of ad network Adify Corporation for $300 million, GSI Commerce Inc.'s $158 million deal for e-mail services company e-Dialog Inc. and America Online Inc.'s purchase of affiliate network Perfiliate Technologies for $125 million.

In the advertising and promotion segment, the total number of transactions grew 10% while the transaction dollar volume dropped 34%. Deals of note included Pegasus Capital Advisors' buyout of European integrated communications agency Gyro International Ltd. for $97 million; Marlin Equity Partners' acquisition of the coupon redemption operations of International Outsourcing Services for $60 million, which it formed into a new company, ProLogic Redemption Solutions; and Daily Mail & General Trust's $51 million investment in media planning and buying company Spot Runner.

The out-of-home and specialty media segment had a 44% increase in the number of the transactions and a 69% decrease in transaction dollar volume. Place-based media, which is benefiting from the growth of digital signage and digital television networks, accounted for the bulk of the transactions. A few of the bigger deals included Veronis Suhler Stevenson Partners acquisition of place-based media and marketing company Brand Connections for more than $150 million, CBS Outdoor Inc. expanded its international footprint with a $110 million deal for South American billboard company International Outdoor Advertising and Goldman Sachs & Co. $83 million investment in place-based media company Skyflying Media.

Marketing technology was one of the largest segments with 133 transactions, twice as many as last year. Total dollar volume grew 25% for an estimated $3.8 billion. The most areas of this segment included content management, measurement/testing/optimization, commerce management and ad serving. Notable deals included General Atlantic and Hellman & Friedman's $575 million deal for the remaining 48% interest in workflow management company Emdeon Health, Hewlett-Packard Company's $371 million purchase of Web-to-print firm Exstream Software Inc. and PayPal Inc.'s $169 million acquisition of Israeli online risk management firm Fraud Sciences Corp.

Digital media was the largest of the segments, with 78 transactions, a 23% increase, totaling $6.3 billion, which was 2.6 times higher than last year. User-generated/social media was the most active area within this segment. Hellman & Friedman's buyout of stock photography company Getty Images for $2.4 billion was the largest in value. It was followed by CBS Corp.'s acquisition of CNET Networks for $1.7 billion and America Online's $850 million deal for Bebo Inc.

Transaction dollar volume grew 43% in the information segment for a total of $4.8 billion while the total number of deals increased 18%. Market research continues to drive M&A activity while marketing data generated more than three-quarters of the segment's dollar volume. Deals of note included Reed Elsevier Group's purchase of marketing data firm ChoicePoint Inc. for $3.9 billion, Quadrangle Group's acquisition of market research firm Greenfield Online for $361 million and Nielsen Company's $225 million deal for IAG Research.

Marketing services generated $1.9 billion in transaction dollar volume, a 42% drop. Transaction volume was up in the call center and list broker/manager categories while it dropped significantly in the loyalty/retention and data processing/enhancement categories. The biggest deals included NCO Group Inc.'s acquisition of call center firm Outsourcing Solutions Inc. for $325 million, Global BPO Services Corp.'s $283 million deal for call center firm Stream and RR Donnelley's $122 million deal for production and mailing company Pro Line Printing Inc.

Share this article:
You must be a registered member of Direct Marketing News to post a comment.

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs: