Losing independence: acquisitions in the digital agencies sector

Another independent agency bites the dust with the recent announcement that digital agency Webling Interactive has been acquired by ad agency J Walter Thompson.

Webling, started in 2004, has a stable of pedigreed clients including Amex, CommSec, Coca Cola, Coles, Fuji Xerox, Google, Mirvac, and Yates. The agency has been well recognised, with Webling’s “My Garden” app for Yates winning the IAB creative showcase award, and an Amy at the Digital Industry Association of Australia’s AIMIA Awards. While the sale was for an undisclosed amount, for the year ending June 30, Webling’s revenues were 4.4 million Australian Dollars ($3.21 million), with gross assets of A$1.3 million.

Mergers and acquisitions in the Australian digital services sector

Digital agencies and related services are increasingly M&A targets for the major consultancies and ad agency networks which are buying both end-to-end, integrated digital capabilities and specialist technical skills.

Acquisitions have accelerated in the last year as digital skills such as innovative thinking, understanding of technology and execution of ideas are finally being valued appropriately, and therefore exit opportunities are opening up. The consolidation of agency rosters by major advertisers and reluctance to deal with small agencies (Source: Society of Digital Agencies 2015 report) has also contributed to the acquisition trend.

The Webling acquisition adds to the growing list of digital agency ownership changes in Australia such as:

We expect the trend of digital agency and services consolidation to continue, particularly as it becomes more difficult for agencies to develop recurring revenue streams. With competition from the large top tier management consultancies, it’s a case of if you can’t beat them, join them.

If you’re interested in finding out more on how to value, grow and develop an exit strategy for your digital services business, attend the one-day Bootcamp on Valuing and Growing your Digital Business on October 14 in Sydney.

Further reading:

-       How to maximise the value of your digital business

-       Society of Digital Agencies 2015 report

About Claudia Sagripanti

Involved in the evolution of mobile marketing and advertising from the early years, including co-founding Mobile Marketing and Advertising Awards, founding chair of AIMIA's Mobile Industry Group, development of mobile advertising guidelines for industry as well as commercialisation strategy.