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Can agencies like Dentsu buy their way into data?

Daniel Domberger questions if buying data-based businesses can help agencies compete with the likes of Adobe and Oracle.

Digital has totally transformed the marketing mix, and the way that media and brand messaging are consumed. This has driven data-led players, and technology-based marketing groups such as Adobe and Oracle, to converge on the territory of the traditional marketing services agencies. The marketing agencies have had to evolve in response.

But evolution is slow. For many, organic growth isn't enough, acquisitions can be the answer.

Collaborating and combining capabilities

You can see this driver in Dentsu Aegis's acquisition of Merkle earlier this month, and in Merkle's own track record of acquisitive growth.

Merkle runs as two businesses. A third of its $450m revenues come from targeted agency services, with well over half of revenues coming from legacy database marketing. The agency services business is more strategically valuable, but Merkle isn't as well-positioned here.

So Merkle turned to acquisitions, making ten in the last five years including Comet Global Consulting.

Time will tell

Dentsu itself has a busy acquisition policy (with ten other deals so far this year alone), it acquired Merkle to increase its digital own presence and insight-led consumer targeting.

At this stage, it is unclear the extent to which Dentsu will seek to integrate Merkle. With Merkle's weak track record of cross-selling between its business units, Dentsu will need to push hard to extract the value from this acquisition.

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Daniel Domberger

Managing Director

Phone: +44 20 7484 4731

Mobile: +44 7903 161330