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Holding groups face fight for talent as Facebook and Google tipped to hit acquisition trail

r3Dentsu and WPP acquired 75 companies in 2016, splashing out US$3b in the process, with digital and analytic firms their principal targets.

A study by global pitch consultancy R3 revealed 80% of WPP’s 36 transactions were for digital and tech agencies, while Dentsu also brought in data and analytic expertise, most notably through the acquisition of US independent agency Merkle.

R3’s analysis of marketing mergers and acquisitions in 2016 covered 398 transactions with $14b changing hands, an increase of 150% over 2015. US acquisitions led the way in terms of number and value, 41% and 50% respectively.

Deals worth US$3.6b were struck in Asia Pacific with R3 principal and co-founder Greg Paull predicting more growth in the region this year.

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The number and value of acquisitions struck by the six major holding groups in 2016

He also warned traditional players to expect more competition for talent in 2017.

“We expect companies such as Facebook, Google, Amazon and Salesforce to be more active investors in the sector this year,” he said. “They have the cash, and they are continuing to take leaderships roles on content creation, so the need for talent will only increase.”

He said the increase in transaction value in 2016 was driven by “more buyers seeking out the best digital and analytic talent from around the world”.

“The only thing that’s clear is that CMOs have never had a less clear choice in seeking our partners in this space,” he added.

Yet of the near-400 deals tracked by R3, the six global holding groups accounted for only 22%.

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Top 10 global marketing deals in 2016

While Dentsu struck 39 deals, up 56% from the 25 in 2015, WPP completed six fewer transactions.

IPG and Publicis Groupe both made six acquisitions, Omnicom four and Havas three, together accounting for only 3% of total M&A.

Paull said traditional holding groups faced competition from private equity players, IT firms, consultancies, Chinese conglomerates and “new buyers” such as Snapchat , Vice and The New York Times.

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Top 10 ‘unconventional’ buyer deals of 2016

IBM was among the consultancies who “got serious” about moving into marketing communications, Paull said, spending US$240m on Resource Ammirati, Aperto and ecx.io. Accenture also got in on the act, parting with US$175m, while Deloitte spent $48m.

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