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Editorial: Deals are a welcome sign of growth to come

It is a new year, but one in which direct and digital marketers continue to watch marketing budgets and exercise caution by sticking with proven and efficient marketing channels. Many companies remain more inclined to keep close to their existing customers rather than experiment with lofty acquisition strategies.

Slowly but surely, though, signs of life have emerged. While direct marketing deal-making was down year-over-year for 2009, fourth quarter 2009 numbers for mergers and acquisitions point to optimism and confidence in the direct and digital marketing industry and signal better times ahead. Deal activity was up sharply in Q4.

Same goes for this year, and while digital properties are of course particularly desirable, this activity isn’t limited to the online realm. Traditional direct marketing companies are equally attractive.

In January alone, search marketing agency Covario acquired NetConcepts, another search marketing firm; enterprise marketing management company Unica acquired Pivotal Veracity, an e-mail deliverability firm; ATG, a commerce solutions company, bought InstantService, a live chat provider. And in December, Carlson Marketing Worldwide, one of the largest US-based loyalty marketing companies, was acquired by Groupe Aeroplan, a Canadian international loyalty management company.

According to several industry experts, this trend will only continue.

“Budgets have opened up and people are spending more on marketing,” said Michael Kessler, managing director of Veronis Suhler Stevenson, an equity firm, in a conversation with DMNews. “This has created an increase in deal activity” he said, which will continue throughout the year. A clear sign of economic recovery.

That is very good news for marketers, who are increasingly interested in consolidating their services with a single vendor. And that is in essence what drives the deal-making in the first place: suppliers who wish to add additional capabilities or add scale in order to better service clients in a full complement of marketing services.

Data giant InfoGroup is still on the block and that transaction, long rumored, is likely to occur early part of this year. At least 33 potential bidders have expressed interest in the firm to its financial advisor, Evercore Partners, according to reports.

A certain amount of direct industry consolidation occurs as market sectors mature. We saw plenty of deal activity and consolidation among e-mail marketers as it grew in the past few years, and the same will gradually happen in the search, mobile and social media spaces. But this recent onslaught of activity is largely indicative that most people in our industry are ready to let the good — or at least better — times roll.

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