AgVoice | Beyond the digital acquisitions...

The last few months have seen a flurry of acquisitions in the Indian Digital space. Indigo Consulting by Leo Burnett, Hungama Digital by JWT, Resultrix by Publicis, Communicate 2 by Aegis Media…

 

The Digital fraternity is abuzz with what this means, and if it is indicative of greater opportunities for Digital players (read: higher revenues). We have of course read what the acquirers and the acquired have had to say – the usual about synergies, meeting of minds, a match made in heaven, just what clients need… 

 

Of course, there are the financial aspects of the deals. No doubt the buyouts have made the promoters of the firms acquired richer, and given them breathing space in an otherwise difficult business environment (not just for Digital but for the whole media and advertising business, as a result of the all-round economic slowdown).

 

But as I am no financial expert and also not privy to the financial details of the deals, I will restrict my views to what these buyouts may mean for marketers (clients), the Digital ecosystem, and the acquiring and acquired firms beyond the evident monetary benefits to both.

 

As Digital adoption by marketers has grown over the last few years (as a result of a growing universe of Digital users in India), Digital service offerings have grown too. With everything from Digital full-service providers to specialists in the areas of Search, Mobile, Website and App Development, Social Media, ORM, Ad networks, Content specialists… in this melee to ride the Digital opportunity, conventional creative advertising and media agencies have also looked to grow their Digital capabilities, offerings and credibility with clients.

 

Things seemed to work well for marketers till they realized that the numerous Digital offerings usually operated in isolation, and the task of integrating all of Digital was often left to them – something most struggled with in the absence of real Digital expertise among their own teams. Further, Digital was only part of the Marketing play, and needed to dovetail with their overall Marketing objectives and business goals, again something that most Digital partners were not adequately equipped to provide to them.

 

With the growing importance of Digital for brands and the increasing investments being committed to Digital, the clarion call from marketers is for integrated thinking and an integrated approach to Digital – with its various components playing like music pieces in an orchestra rather than solo pieces.

 

By associating with larger network agencies, these specialist Digital agencies will be better equipped to provide a higher quality of brand understanding that their acquirers would provide. And the acquiring agencies would be better placed to integrate Digital into their strategy and campaigns thanks to the Digital specialists now being within their fold, post-acquisition. This could help address to some extent the integration and big picture view that clients are demanding.

 

Before both the acquirers and acquired set off singing in glee, something to keep in mind. Integration is not only restricted to how presentations are made or campaigns are managed, but to be truly credible needs to start with internally integrating the Digital partner acquired with the mother agency. It would mean the Digital ability needs to be imbued into the acquiring agency’s teams, and the brand approach imbued in the Digital folks who become part of the new integrated entity.

 

While this will help the cause of the agencies to a great extent, the new agency network alignments of the Digital agencies acquired may affect some of their existing client relationships. This is due to potential network-level conflicts. You win some, you lose some I guess.

 

From the acquired Digital agency’s perspective, access to global accounts of the acquirer network will no doubt be a boon. Especially in the areas of Search and technology development work, where the cost efficiencies of an India set-up could help grow business from outside India.  And hopefully, some of the strategic tools and methods used by the acquirer network may help the specialist Digital offerings of the acquired agencies improve their capabilities and competitiveness in the Indian marketplace against other home-grown and independent Digital agencies.

 

For the acquirer agency, adding Digital revenue streams to their P&L overnight thanks to the acquisition is the easy part. However, they are likely to soon realize that real integration is fairly challenging – after all, it takes more than adding a Digital leader (from the acquired agency) to their leadership team to be seen as an agency that gets Digital as well as they get brands and advertising and media.

 

That said, the next couple of years will see more such acquisitions. There will also be the shut-down of Digital specialist agencies as they realize they are unable to provide holistic marketing and communications solutions to client (with Digital integrated into them, and not Digital exclusive).  As also the slow decay of network agencies that do not truly integrate Digital into their offerings. 

 

We will see the lines blur between Digital and non-Digital, as more and more communications turns Digital i.e. interactive rather than broadcast, and as more and more consumers  connect with each other and brands in an interactive environment.

 

Interesting times ahead. For the media and communications business. For the Digital ecosystem in India. And for brands and marketers. | By Ashok Lalla, Digital Marketer and Founder & Author of 'The Future of Digital for Brands'