The San Diego, Calif.-based shop ranks among the top 20 largest search shops in the U.S. with revenue of $37 million in 2013, according to the Ad Age DataCenter. Its U.S. revenue was up 21% last year.
Covario's agency business will become part of Dentsu Aegis Network, and will ultimately operate as iProspect -- Dentsu Aegis' global digital performance agency.
"We have a very clear strategy for the capabilities and agencies we bring into our operating model," said Nigel Morris, CEO of Dentsu Aegis Network Americas and EMEA, in a statement. "Covario is uniquely suited to complement and scale iProspect's outstanding offering as the world's leading digital performance agency."
"Covario's San Diego-based headquarters also provides a powerful West Coast presence that is critical for iProspect's growth," added Jeremy Cornfeldt, president of iProspect U.S.
Covario touts a global presence, over 140 staffers and an SEO software unit in San Diego. Ad industry veteran Nick Brien in May 2013 joined Covario's board of directors. Mr. Brien until November 2012 was chairman-CEO of McCann Worldgroup, part of Interpublic Group of Cos.
The move is the latest indication that Dentsu will continue its small and strategic approach to M&A outside Japan after spending the past few years making big buys and strengthening its scale and presence around the world. The acquisition contrasts rumors -- albeit rumors that Dentsu Aegis CEO Tim Andree squashed publicly last week -- that the Japanese holding company could buy Interpublic.
Dentsu's acquisition of U.K.-based Aegis Group last year transformed the Japanese company into a more global player. The company's latest string of deals signals Dentsu's continued push to meet its five-year plan, in which it aims to generate at least 55% of its revenue from outside Japan by 2017.
Dentsu Aegis, the name for the Japanese holding company's operations outside Japan, in May acquired New York-based events and promotions shop MKTG Inc for $52 million. Last year, Dentsu Aegis made 17 acquisitions. And this year, the company has made eight so far, not including Covario.
Dentsu reported revenue of 594.1 billion yen ($5.94 billion) in the year ended March 31. That was up from 345.9 billion yen in the year-earlier period, which did not include Aegis (acquired in March 2013). The company hadn't provided pro-forma figures giving a like-for-like comparison.
Dentsu Aegis worldwide revenue, reflecting estimated revenue including Carat, Vizeum and Posterscope, grew 7.5% to $2.8 billion in 2013. The U.S. contributed less than half of that revenue.