Advertising and marketing agencies can expect to see a boom in mergers and acquisitions this year as big holding groups step up their acquisition efforts, especially in digital and social media.
That's the verdict of a string of City firms, led by the corporate advisory boutique Clarity, which has found that the number of agency buyouts has soared.
The "Big Six" marketing and communications groups, which include WPP, Publicis and Omnicom, bought at least 107 agencies globally in 2012 – sharply up from 54 in 2010 and 98 in 2011.
The biggest takeover in Britain last year was the £3.2bn purchase of Aegis by Japan's Dentsu, but there was a series of other deals, including the sale of Adam & Eve to Omnicom, BBH to Publicis and AKQA to WPP.
"We expect this level of activity to continue," said Marcus Anselm, partner at Clarity, who described this trend of big groups using acquisitions as a means to hire talent as "acquahire".
Mr Anselm cited the sale of Adam & Eve, on which he advised, as an example. Omnicom has used the agency, famed for its hit John Lewis ads, to inject energy into its existing subsidiary DDB, by merging them to form Adam & Eve/DDB.
More than 90 per cent of takeovers in the sector last year were for companies with a value below £30m and around 70 per cent were in digital, according to the broker Brewin Dolphin.
Pressure on big groups to increase online revenue is a key driver. "Given the presence of numerous small players in this sector, we expect the market to consolidate fast," said Nicla di Palma of Brewin Dolphin.
Espirito Santo bank expects more M&A as valuations are "soft" because of the weak UK economy.
"We see this environment as particularly favourable for unleveraged and acquisitive companies such as the advertising agencies," said the analyst Giasone Salati.