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Clients' ROI needs drive agency deals

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As clients increasingly demand proof of ROI on their marketing investments, agencies are scrambling to beef up services in search marketing, direct and customer relationship management. Many are meeting this need by buying specialist shops.

In the past month, several agencies announced acquisitions, including AKQA's purchase of SearchRev; PriceWeber Marketing Communications' acquisition of Tectonic Concepts; Specialist Marketing Services' purchase of 21st Century Marketing; DGWB Advertising and Communications' acquisition of Argus Interactive Agency; and V12 Group's purchase of Teramedia.

"We are continuing to see a shift of traditional agencies realizing the need to get into digital and interactive agencies that are already in this space to realizing the need to get deeper into some of the different tactics," said Peter Kim, senior analyst at Forrester Research. "Interactive is more than just building Web sites. Agencies are looking to get more specialized because these are the kinds of services that clients are looking for."

Tom Bedecarre, CEO of AKQA, said the acquisition of SearchRev, a search engine technology company, will help the agency provide more advanced search services to meet client needs.

Bigger player in search

"Increasingly, clients want to see that their money is being spent in a way that can demonstrate ROI," Bedecarre said. "Search is the largest part of online advertising, and we wanted to be a bigger player in that space."

SearchRev will operate as a stand-alone agency, providing search engine technology to AKQA as well as to other agencies and clients. "This is next-generation technology for search engine marketing that will offer a significant improvement in ROI for search marketing," Bedecarre said.

Financial terms of the SearchRev deal were not disclosed. Bedecarre said the current credit crunch had no impact on the deal.

Shanna Columbus, president-CEO of PriceWeber, said the acquisition of Tectonic Concepts was also driven largely by client demand for more advanced services.

"It gives us the types of enhanced capabilities that our clients are looking for," Columbus said. "They count on us to provide new capabilities and new ways of attracting and retaining customers."

The acquisition will give PriceWeber expanded capabilities in CRM, search engine optimization, Web site hosting and application development.

Tectonic will be merged into PriceWeber's existing operation in Louisville, Ky. The purchase price was not disclosed. Columbus said the credit crunch did not affect the deal because no additional credit was needed to fund the acquisition.

"We are very cautious in our approach, and we expect to see a payback in a very short period of time," Columbus said of the deal. "You don't want to jeopardize your existing clients and basic services." Also last month, direct marketing agency Specialist Marketing Services announced the acquisition of list management agency 21st Century Marketing for an undisclosed sum. "SMS and 21st are alike and complementary in many ways," said Lon Mandel, president-CEO of SMS, in a statement. "We have different strengths which, when combined, will provide a complete, leading-edge direct marketing solution to our valued clients."

DGWB Advertising and Communications, a full-service marketing communications agency, acquired Argus Interactive Agency, an online marketing and Web development company. Financial terms were not disclosed.

The acquisition will expand DGWB's digital marketing services, including search engine marketing and optimization, Web design and development, and Web analytics consulting.

In another deal last month, direct marketing agency V12 Group acquired Teramedia, a list manager and broker, for an undisclosed price. Teramedia's services, including direct mail, e-mail, telemarketing and multichannel lists, will complement V12's direct marketing services, including e-mail marketing, database marketing and lead generation.

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