After AKQA Sale, LBi Steps Into Agency Acquisition Limelight

Holding companies zeroing in on formidable European indie, sources say

While AKQA’s sale to WPP this week may represent the last major privately held digital agency entering corporate waters, industry players say holding companies will continue to cast their nets toward independent shops. And sources predicted that Europe’s LBI is the next big fish to join the schools of agencies held by WPP, Publicis, Interpublic or Omnicom.

In addition to the publicly traded LBi, Brian Wieser, senior analyst at Pivotal Research Group, threw SapientNitro, also public, into the discussion. Even though private firms are generally less messy to acquire, Weiser suggested that the Big Four holding companies wouldn’t balk at the opportunity to pick up LBi and SapientNitro if the price is right. 

“Those are the two standouts that are more likely than not to generate noise with respect to potential acquirers,” he said. “LBi’s challenge is that it’s Europe-centric, and that’s not exactly an en vogue region, even though it’s a heavily digital [geographical] area with very good agencies.”

It’s unlikely the holding companies will stop with that pair, Weiser and others said. After an 18-month period that’s seen digital shops like Rosetta, Big Fuel, Firstborn and Rockfish swallowed up, the acquisitions scene may be shifting to less expensive assets. WPP has been reportedly negotiating with Brooklyn, N.Y.-based Big Spaceship, hammering away at a possible deal around $12 million. Other names like Rokkan, Profero, Breakfast, Victors & Spoils could also be in play. 

“The major battlegrounds have been won,” said Don Scales, president of marketing firm iCrossing. “Next, it’s the smaller battlegrounds. It’s the Big Spaceships of the world.”

Scales said AKQA leaves a void in the acquisitions scene that may be ripe for the taking. “From an entrepreneurial standpoint, I think this is an absolute great time,” he said. “There’s such an insatiable appetite for digital marketing assets that these [holding companies] are willing buy quality firms. If you can put some agencies together and do some form of roll-up to get you north of $100 million [valuation], you are going to grab the headlines because there is nothing else big out there.”

Business for digital shops—benefactors of fairly dramatic advertising spend shifts towards their space in recent years, not to mention an ongoing shortage of experienced digital talent—seems to remain on an upward trajectory. “The demand right now is insanely strong,” said Zach Newcomb, account director for Rokkan. “We have more demand that we can deal with at the moment.”

Meanwhile, to some industry observers, the sale of AKQA represents the end of an era. Originally a startup launched alongside digital frontier agencies like Razorfish and Organic in the 1990s, AKQA now has nine worldwide offices and 1,000 employees. It was the last independent standing from Internet marketing's salad days.

“The dot-com agency era is officially closed 12 years after the market said it was over,” said Weiser from Pivotal Research. “The promise of so many of these shops was for so long unclear. In the last decade, it became clear that they were agencies.”

Among other things, he suggested, the WPP-AKQA marriage underscores how the marketplace is trending to advertising services that facilitate integrated campaigns.

“We got to a point where, despite being widely regarded as a standout digital creative agency, [AKQA] was maybe lacking in full-service capabilities that have become increasingly important,” Wieser said. “Being digital by itself is not sufficient for the purposes of large marketers. They are showing a preference for more integration at sometimes the expense of best-in-class capabilities. More integration is more important.”


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