This week saw Publicis acquire a majority stake in pure-play social media agency Big Fuel based in New York. Keith Hunt, Results International managing partner, looks at the growing trend for big advertising groups investing in social media…
At the start of the year Results predicted a social media land grab and the last two weeks in media land are testament to this. Publicis acquires its stake in Big Fuel hot on the heels of M&C Saatchi buying into Human Digital.
It’s also further demonstration that the major networks have very significant funding to continue acquiring in the digital/social media space; this was reinforced by Maurice Levy announcing that the group’s M&A budget for 2011 had been “bumped up to nearly $1bn, from $700m”.
Owner/managers of social media agencies looking to realise the value they have built in their businesses will increasingly have their eye on a sale. There are still only a few independent social media agencies of any significant size – perhaps a dozen at most in the UK – so rarity value is playing in their favour.
Yet the window of opportunity to sell is likely to be pretty brief – the ‘sizzle’ in the market will soon disappear, and now is the time to act. We are seeing social media agencies starting to lose pitches to non-specialist agencies. A range of warning signs leads us to believe that social media agencies have this year and possibly some of 2012 to make their move.
However in the short term we predict real competition to bag the most attractive names in social media and recent events confirm this. Many buyers are willing to take a punt on agencies with little or no track record; not quite the$20m paid by Yahoo! for 12-week-old company, IntoNow, but nonetheless higher than for conventional agencies.
By Keith Hunt
Managing partner
Results Internationalwww.resultsig.com