Digital Media Industry Consolidation in Asia

Major international advertising agencies such as Publicis, WPP, Omnicorp, etc. have acquired many smaller fishes in Asia and more specifically in India and China during last 4 years. Following is a chronological list of M&A that has happened in India and other parts of Asia since 2006. I presented this report to a guest faculty in my school (who's also the CEO of a very popular international ad agency) and he found it quite insightful!

From a Mint article published in early 2007:
Some of the recent international heads, who have unveiled their digital objectives in national and international interviews, include WPP’s Global Strategy Director Mark Read; Havas CEO Fernando Rodes Vila; Publicis Worldwide COO Robert Pinder; Aegis Media Asia CEO Richard Halmarick; IPG’s Steve Gatfield (CEO, Lowe Worldwide); and Omnicom Vice Chairman Michael Birkin.                                                                                         

  • In June, Publicis bought French agency Business Interactif for $182 million before acquiring China’s largest independent ad agency, Communication Central Group (CDG), a month later. Then in September the group bought Parisian mobile ad operator Phonevalley 
  • In December, Publicis bought ad network Digitas for $1.3 billion and, expanding Digitas’ Boston-based Modem subsidiary, is setting about growing the Publicis Modem digital imprint internationally.
  • Publicis paid a premium of 23.5 per cent over the stock market price to win a bidding war for Digitas and establish a global rival to the likes of WPP’s Ogilvy Interactive and Aegis Group’s Isobar
  • September-07 – Publicis continues to snap up digital agencies to bolster its online activity, this time buying Paris-based interactive house Wcube for an undisclosed sum.
  • Publicis Groupe acquires a majority stake of Capital Advertising, the most important independent agency in the Indian capital Delhi, and one of the key independent advertising agencies in India. 
  • Publicis Worldwide COO Richard Pinder visited India several times in 2007 to meet potential candidates for acquiring in the digital space.

  • International digital marketing company Digitas, owned by global advertising major Publicis Groupe, is ready to enter the Indian market in partnership with Solutions, a domestic marketing agency. The new entity will be called Solutions Digitas. Publicis has a 60 per cent stake in Solutions.
  • Announcing its India foray, Digitas Global CEO Alan Rutherford said this was the right time to enter the country as digital marketing in India was poised for a big growth."India has a strong advertising and marketing culture, it is strong on creative talent. The market is growing fast here and open to new ideas," he said. Digital marketing was not just online marketing, he explained and added that mobile marketing would also boom in India as in China.
  • 26/03/08 Digitas launches Solutions | Digitas in India and Singapore
  • 31/01/08 Acquisition of Act Now in the USA
  • 07/02/08 Publicis Groupe acquires La Vie est Belle
  • 22/05/08 Publicis groupe acquires Emporioasia, leading digital agency in china
  • 19/06/08 Publicis Groupe in Strategic Joint Venture in China - Launches Saatchi & Saatchi Energy Source Integrated Interactive Solutions
  • 25/06/08 Publicis Groupe Launches VivaKi - A New Growth Engine for the New Media and Digital Environment
  • 25/06/08 Publicis groupe and Yahoo! Unveil broad technology initiatives to drive greater advertiser effectiveness and consumer engagement online and on-the-go
  • 22/07/08 Publicis Groupe Acquires Portfolio - Leading South Korean Full Service Digital Marketing Agency
  • 06/08/08 Publicis Groupe to Acquire Performics Search Marketing Business
  • 03/09/08 Publicis Groupe Acquires PBJS, leading Interactive Marketing and Events Agency
  • 10/09/08 Publicis groupe completes acquisition of performics search marketing business
  • 2009-09-29 - Publicis sets digital and BRIC countries as its priorities. It expects 25 percent of its revenue to come from digital activities and another 25 percent from BRIC countries, including Brazil, Russia, India and China by 2010
  • June 2009 - In an interview, Publicis CEO talks about the network’s performance, its business priorities in India and merger and acquisition (M&A) strategy:
    • What are your business priorities globally and in India?
    • Three things I’m trying to do globally: 
      • Ensuring that we are clearly positioned and seen as the company providing contagious ideas that change the conversation. I believe the role of our business is to provide much more than TV commercials for clients. It’s to provide an idea that people want to talk about and share with each other. I want our creative profile to rise substantially. We are already among the top 10 of the Gunn Report in our 83-year history and now I want to be in the top five in the next three years.
      • The second is digital. I want 30% of my global revenues to be in digital by 2012. I’m already at 15%. When I took over the job we were a little under 7%. In India, I think, we can grow at a faster pace but we’re starting at a lower base of about 5%.
      • The third is, the world we are in has seen a huge rupture with the past and I want the new generation of clients and talent to look at us and say “wow, you’re leading the way”.
    • What is your M&A strategy globally and in India?
      • We have in Red Lion an interesting design company, that we’re looking at creating a global brand consultancy design business. The group sees organic growth, stealing of market share from competitors, as a way out of the current crisis—not acquisition. But if we have opportunities to acquire in fast growing geographies, or fast growing industries, such as digital, then we will. The fact that India has both makes it quite exciting.
  • Chief Executive Officer Martin Sorrell made 37 acquisitions in 2007 including digital agency Quasar Media of India and U.S. company Schematic. 
  • WPP chief executive said: “The reason we grow in China, the reason we have 9,000 in China and a 15% market share, and 50% market share in India and 6,000 people there is that our clients are growing there. 
  • WPP is well ahead of its competitors in cracking Asia; the firm identified 1,200 potential acquisitions in China. Miles Young, chairman of Ogilvy & Mather Asia Pacific, says WPP cherry-picked 18 acquisitions in greater China (includes Taiwan) these last four years, and Sorrell himself visited the country seven times in 2007.
  • Martin Sorrell, the CEO of global advertising and communications conglomerate WPP Group Plc., wants his empire in India to grow even larger than it is. WPP controls the majority stake in the Indian arms of several large agencies including Ogilvy and Mather and JWT.
    • What is the group’s priority in India? -  
      • Growth in digital media. The WPP Group’s revenues from India total $350 million. Our current market share is 50%. 
    • Other acquisitions: In the first four months of 2009, the Group made acquisitions or increased equity interests in advertising and media investment management in Italy, Portugal and South Africa; in information, insight & consultancy in the United Kingdom; in public relations and public affairs in Poland; in direct, internet and interactive in France and Hong Kong; in digital in the United States and in healthcare in France.
  • The growth for the advertising industry will come from the new markets in Asia and Latin America, said Sir Martin Sorrell, CEO, WPP. In 2009 about 40 per cent of India revenue for the group came from new media while 60 per cent  from mainstream advertising. Worldwide the ratio is the reverse.
  • With revenues of $400 million (worldwide group revenues $13 billion) and 8,500 employed in the country, he says India is a growth market and expects revenues to grow 3-5 per cent this year.
  • India, according to Sir Martin, scores high on new media and consumer insights, which are the emerging trends in the media and communications industry. Currently, clients spend 12-13 per cent of their budgets on online media, while users spend 20 per cent of their time online. So, the Internet is still under-used, he says.

Local Indian Marketing/PR Agencies have also done several strategic M&A:
  • Future Group – Kishore Bayani’s firm
    • Apr-09 – Future Group acquires a 60% controlling stake in creative boutique Dhar & Hoon. Dhar & Hoon has also been a takeover target with several global agencies like Publicis and Euro RSCG having initiated talks with the agency. 
  • Lintas Media Group has five functional collaborations, including one in the digital space where it has a non-equity collaboration with Pinstorm, an independent digital company with offices in Asia and Silicon Valley. This venture will undertake creative and media digital work for brands. It can tap Pinstorm’s proprietary technologies from search engine marketing (SEM) to blog management.
  • Clickstreamers India Pvt. Ltd, a digital media agency, is a 51:49 joint venture between Dentsu India and a local digital firm, Connecturf India Pvt. Ltd. It offers the entire gamut of digital services, including social media optimization. 

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