Advertising M&A Market Slowed Considerably in Q4 2008
The advertising deal market reflected the slowing economy in Q4 2008, according to a new report by Petsky Prunier, an investment bank specializing in ad agencies and marketing services. Direct Mag gives this summary:
The 140 transactions it tracked from the fourth quarter totaled $4.7 billion, reflecting a 42% decline in deal volume compared to the fourth quarter of 2007, and a 27% decline from the third quarter of 2008.Among the notable deals that did occur was WPP's acquisition of Standard Rate & Data Services from Nielsen. Many of the remaining deals took place outside the U.S., such as in Asia. Here are some highlights from the report itself:
- Web advertising deal volume down The Interactive Advertising segment recorded a significant decline in transaction volume in 2008, with Petsky Prunier tracking 167 deals for an estimated total of $3.2 billion, down 29% in number of transactions announced and more than five times in total estimated dollar volume from year-end 2007.
- Ad agency deals flat Transactions totals in the Advertising & Promotion segment in 4Q08 remain unchanged from 3Q08 (4 deals, $60 million), while deal and dollar volume recorded a drop-off of 60% and 57%, respectively, from 4Q07.
- Outdoor was actually up With Sina's approximately $1.3 billion acquisition of Focus Media's OOH media assets, transaction dollar volume was up significantly in the Out-of-Home & Specialty Media segment from both 3Q08 and 4Q07 levels
- Marketing services segment depressed For the fifth straight quarter, the Production & Mailing segment, which includes print, lettershop, fulfillment and logistics companies, led in both transaction volume and value. Totals for the segment were down noticeably from 3Q08, recording a 29% decrease in transactions announced and dropping 4.5 times in dollar volume. The Direct Marketing Agency subsegment was hit hard, declining from three deals worth $172 million in 3Q08 to no transactions in 4Q08. Data Analytics and Loyalty/Retention totals were up this quarter relative to 3Q08, each accounting for three transactions.