Strong flow of deals in UK advertising continues

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The deal tracker from specialist advisory group Moore Kingston Smith has recorded 118 UK media and marketing services deals as having completed in Q3. This made it the most active quarter of the year so far, up 11% on the 106 deals recorded in Q2.

The UK economy may be experiencing difficulties but these do not yet appear to have dampened the enthusiasm of corporate and private equity investors for the media and marketing services sector. This year is on track to record an increase in deals over 2021, provided activity does not drop off in coming months.

Media and marketing services covers a broad range of activities. For the purposes of this report, transactions were allocated to three main categories: marketing services; publishing; and TV, film and entertainment (which includes gaming and music).

64% of the 118 Q3 deals fell within the marketing services sector, with a total of 75 transactions completed. TV, film and entertainment also had a busy Q3, with 32 deals announced. This compares with just 20 transactions reported in Q2, and TV film and entertainment accounted for 27% of all transactions in Q3, which is a significant increase on the 19% we recorded in Q2. Publishing showed a slight decline in activity, with just 11 transactions recorded in Q3, compared with 13 in the prior quarter.

Analysis of the 75 marketing services transactions completed last quarter was used to determine whether the company acquired was a full-service agency or a specialist in one of the marketing services disciplines, such as PR or advertising.

In Q3 2022, advertising specialists were the clear favourite with acquirers, followed by data and analytics businesses.

The Moore Kingston Smith Q2 report reflected on the recent resurgence of interest in advertising. It represented just 7% of marketing services deals in Q1 2022, rose to 15% in Q2, and now accounts for more than a fifth of all transactions that completed in Q3. Advertising agencies are predicting continued growth in advertising throughout the remainder of the year. This is partly as a post-pandemic rebound but also because of certain cyclical events, such as the US mid-term elections and the FIFA World Cup.

Moore Kingston Smith’s corporate finance team has been busy in the advertising space throughout 2022. The team completed yet another transaction in Q3, advising integrated marketing and communications group Selbey Anderson on its acquisition of creative advertising agency AML Group. AML Group creates global advertising campaigns for clients in complex and regulated markets, including finance, security and business services.

Paul Winterflood, Corporate Finance Partner at Moore Kingston Smith, led the team advising Selbey Anderson and said: “High quality advertising and creative capabilities are currently highly sought after, particularly due to the fragmented acquirer landscape. There are a lot of different acquirers with a requirement for a jewel in their creative crown.”

In the marketing services sector, while most deals involved the acquisition of traditional service-led agencies, 23% of the deals recorded in Q3 were technology-led. These involved businesses that have developed and are selling innovative software and technology solutions to their clients.Over half of these transactions related to martech companies – companies developing and using technology to assist with a digital marketing strategy, including such elements as content and social, lead generation, customer acquisition and retention, and data and analytics.

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