Online Marketing, Ireland

In April 2008, online marketing agency, Interactive Return, was acquired and became part of Publicis Groupe Media (Ireland). This post examines the motivations for mergers and acquisitions between digital advertising agencies and offline (traditional?) advertising agencies as well as the challenges and opportunities presented by such events. The prospects for similar mergers or acquisitions in the Irish marketplace are then addressed.

Motivations for the Digital Agency to Merge or be Acquired
1. Digital marketing has become mainstream. For advertisers in many sectors including travel, accommodation, tourism, financial services, technology, retail and government, a significant portion of advertising and other promotional budgets now goes into digital channels. As digital marketing budgets increase, advertisers are seeking to spend this budget where they spend the rest of their advertising budget - with their ad agency or media buying agency. The larger the advertiser’s digital budget, the faster this migration of online marketing budgets to the established ad agencies occurs.

2. Acquisition by a large ad agency should provide for the digital agency (easy?) access to larger advertisers.

3. Partnering with a multi-channel offline agency should provide opportunities to execute integrated online/offline/through-the-line campaigns which (from recent experience) is very interesting.

4. Most digital marketing agencies are micro-sized, owner-managed entities. Acquisitions and mergers provide the principals and other shareholders with an opportunity to realise the investment in the company.

Motivations for the Ad Agency or Media Buying Agency to acquire a Digital Agency

1. Advertisers are seeking integrated online/offline solutions. While, in many sectors, the proportion of the budget given to online may still be small, online is the fastest growing area of advertising spend for virtually all advertisers. In an economic downturn, many observers feel that there will be an even faster migration of advertising budgets to online channels.

2. Even where the demand from advertisers for online marketing appears to be low, online is still cool. Ad agencies want to be able to demonstrate that they are “ahead of the curve” in regard to their online capabilities.

So, what’s it like being part of big ad agency now?
I’ve heard this question a few times over the last four months. The short answer is, “it’s great”. Myself and my colleagues have been welcomed with open arms into our new parent company. Interactive Return continues to operate quite independently but in partnership with Publicis companies in Ireland and further afield. My colleagues in those companies feel that Interactive Return brings value to their client campaigns. As a result Interactive Return is now working with more global brands than ever before.

It is often suggested that concern about loss of budgets to offline channels can hamper the integration of a digital agency into a larger offline agency. If everybody says it then I guess it must be true. However, we most certainly have not experienced it. A genuine commitment by all stakeholders to ensure that we deliver what’s best for the client has resulted in the integration of Interactive Return’s service portfolio into the overall Publicis offering within a few short month

Digital Marketing Landscape in Ireland
Of the main global advertising networks, in Ireland just one of these, Publicis, has built-up its digital marketing capabilities through acquisition, as well as through organic growth. The other networks have taken a more cautious approach. There remains a large number of small, independent online marketing service providers. Some of these have done pioneering work for many years. As the industry matures during an economic downturn, I believe there will, in the next one to two years, be considerable consolidation through business failures, mergers and acquisitions. Small, independent service providers will continue to be successful where they can excel in new online marketing niches.