The deals just kept coming in the first half of the year. Increasing competition in the advertising agency and digital marketing businesses, the continued growth of social media and the need for analytics to make it all work ensured that not a moment was to be spared.

In the global $70-billion digital marketing industry, with the US alone accounting for over 50 per cent, Indian agencies are being gobbled up even as you read this.

The last six months have been rife with mergers and acquisitions, given that digital and online media have dramatically increased the ways consumers interact and engage with brands. And with the search market still expecting double-digit growth in the coming years, mergers are set to create a much larger canvas to develop as well as access global tools and knowledge.

Aegis Group plc acquired Communicate 2 in India; French multinational Publicis Groupe acquired Mumbai-based digital marketing start-up Resultrix Media; Komli Media acquired Singapore-based Admax Network Pte; Gruner+Jahr, the publishing division of European media conglomerate Bertelsmann AG, picked up a majority stake in digital ad network Networkplay; Ad2c acquired Gurgaon-based Mobimasta, a mobile marketing agency, and ad network Tyroo Media teamed up with Anurag Gupta for a management buyout of the affiliate ad network DGM India.

Corporates have realised, now more than ever, that they need to interact and engage with their customers in order to remain relevant in a constantly changing, increasingly social world. Digital agencies catering to these technologies have never had it so good, and are being lapped up one after another.

Late last month, Galloping Horse in partnership with Reliance MediaWorks acquired all assets constituting the business of Digital Domain and Mothership, a commercial production house that creates visual effects for feature films and advertisements.

An official said the deal involved studios in California and Vancouver and a co-production stake in the feature film Ender’s Game .

Reliance MediaWorks (formerly Adlabs Films) is a film and entertainment services company and is part of the Reliance Anil Dhirubhai Ambani group. Recently, the company raised Rs 605 crore from private equity investors for debt re-payment and for expansion.

Industry experts who spoke to BrandLine emphasise that despite the global economic uncertainty, there are several reasons to expect more media mergers and acquisitions (M&As) right up to the end of 2012. First, major media companies, from ad agency holding companies such as WPP Group and the Publicis Groupe are constantly looking to expand their analytics and other digital capabilities.

And second, even as they are keen to extend their global reach, an India footprint has become a necessity these days with these media majors.

Take the case of Interpublic Group (IPG), the world’s fourth largest advertising network after WPP, Omnicom and Publicis, which decided to acquire the largest digital marketing agency in India, called Interactive Avenues.

The buy will bolster IPG’s presence in the digital space. The deal size is still a mystery, and could not be ascertained despite repeated requests. As an official pointed out, apart from IPG, groups such as Publicis and Dentsu were also in the race, but the New York-headquartered company bagged the prize.

As did Aegis Media, which acquired Communicate2, a Mumbai-based marketing and search agency in India. London-listed Aegis Group plc is a media and digital communications group.

Aegis in India has Ashish Bhasin as its chairman. He also handles regional responsibility as CEO of South-East Asia for the Aegis Group.

Bhasin told BrandLine , “We are the world's largest agency and have a very clear vision that by 2015 we must be the Top 3 in every medium that we operate in. While in some we will do that organically, in others we will acquire.”

The acquisition, Bhasin said, was in line with the strategy of strengthening the presence and capability of Aegis in the digital space in India. With this acquisition, Aegis Media becomes one of the strongest agencies in the digital space in India. Communicate 2 focuses on search marketing, digital strategy consulting, social media and digital content production.

Recently, Aegis had made an acquisition in the US with digital agency Roundarch and Catch Stone in China.

“The fastest growing sector is bound to be ‘search’. The main reason all digital will grow is that search will be propelled because of mobile phones. We have 900 million 3G smartphones as of now. People have underestimated the potential of search,” added Bhasin.

Asked about the India acquisitions, he added, “We looked at many players in the market, we did the short-listing. The largest player in the global market was iProspect, so by acquiring it we instantly became Number 1 in India.” Communicate2 has been merged into iProspect.

Incidentally, even as you read this, the company added one more digital brand through the acquisition route. Aegis Group acquired Hablar, a Japanese search agency, for an undisclosed sum on October 29.

Hablar, located in Tokyo, focuses on search marketing and digital performance media and was established in 2003.

As Bhasin added, “There is a certain chemistry in Aegis, which was a loss-making company at one time. We had 35 people end-2008, while Aegis has some 400 people now. Our revenues have grown by 900 per cent, profits have grown by 1,250 per cent. We have had a very good run and now want to take it to the next stage.”

But not before it could end up being acquired itself.

BIG FISH EATING BIG FISH

With Japanese giant Dentsu announcing that it would acquire the UK-headquartered Aegis Group plc in a $5-billion deal, Aegis India may soon have to learn to live with the M&A scene closer home.

Both Dentsu and Aegis have strong India arms. Rohit Ohri, executive chairman, Dentsu India Group has said that though the acquisition would only come into play by the end of 2012 for the India operations, the duo will have to look at working together to grow the market.

And that is exactly what most of the media houses aspire to do. While Publicis Groupe acquired Resultrix, a digital marketing agency to accelerate presence in the fast growing market and develop its capabilities in digital marketing, advertising and media major WPP acquired a majority stake in Mumbai-based Hungama Digital Services through its wholly-owned operating company, JWT Singapore.

DOWNSIDE

However, sometimes things don't go as planned. Hyderabad-based digital marketing solutions provider Ybrant Digital Ltd’s deal with Experian Interactive Media, currently the top five Internet advertisers in the US, to buy the latter’s three Internet brands has not gone through as planned.

In May 2012, Ybrant said it was acquiring three international Web sites - PriceGrabber, LowerMyBills and Classes, USA, for $175 million from US-based Experian Interactive.

“The proposed deal to buy the Experian properties could not be completed within the committed timeline. The company is working towards the same and will notify the exchange as soon as some concrete developments occur,'” Ybrant said in a statement to the bourses.

In August 2011, Ybrant Digital got listed on the BSE through a reverse merger with LGS Global in a $550-million deal. With seven other acquisitions in its kitty, including assets of US-based search engine Lycos in August 2010 for $36 million, could the delay be just a minor bump for the digital firm?

With a rumoured $400 billion in cash to put in the marketplace, mergers and acquisition are only set to grow, as growth in the digital, social and mobile space shows no signs of slowing down.

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