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Marketing Technology Industry Sees Growing Consolidation

Deal making for digital content firms drives strong M&A activity

April 27, 2016

Merger and acquisition (M&A) activity in the marketing technology, advertising technology and digital content sectors is off to a fast start in 2016, as bigger players look to boost their own capabilities and capitalize on growing demand. Based on Q1 2016 research from investment banking firm Luma Partners, the first quarter saw 72 merger and acquisition events among advertising technology, marketing technology and digital content firms—the second-highest quarter for M&A activity since the start of 2015.

US Digital Media Company Mergers and Acquisitions Activity, by Sector, Q1 2015-Q1 2016 (number of transactions)

According to the study, companies in the digital content sector saw the highest number of transactions, as well as the greatest number of transactions above $100 million. The sector saw 34 transactions in Q1 2016, with seven of these transactions estimated to be worth more than $100 million. This was in comparison to 19 transactions in both the marketing technology and advertising technology sectors.

Among the firms included in the Q1 digital content transaction activity were Bitstrips, a company acquired by Snapchat for an estimated $100 million, and mobile keyboard firm Swiftkey, which was acquired by Microsoft for an estimated $250 million.

Key Trends that Will Drive Merger and Acquisition Activity in the Technology Sector in 2016 According to US Executives (% of respondents)

Other companies tracking merger and acquisitions suggest marketing technology firms associated with activity like data analytics may be a target for future deal making in 2016. According to a survey by consulting firm KPMG, data analytics was the most-mentioned trend that will drive merger and acquisition activity according to US executives.

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