For Immediate Release
Chicago, IL – October 08, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Omnicom Group Inc. ( OMC- Free Report), Publicis Groupe SA ( PUBGY- Free Report) , WPP Plc. ( WPPGY- Free Report), Millennial Media Inc. ( MM- Free Report) and Amazon.com Inc. ( AMZN- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Monday’s Analyst Blog:
Mergers & Acquisitions: A Survival Bet for Ad Firms
As smaller ad firms faced the pinch to reduce costs during and after the Great Recession, they offered a lucrative option for takeover by larger firms. Moreover, ad firms received lesser contracts from companies, which reduced their ad budgets to sustain the macroeconomic challenges.
The advertising industry benefits from large economies of scale. The cost structure of the industry is more fixed, compared with other marketing businesses, which make it favorable for smaller companies to collaborate.
Let us look at some key merger & acquisitions that have taken place in the ad industry in the recent past:
Omnicom & Publicis Groupe
The biggest merger in the industry was probably the collaboration of Omnicom Group Inc. ( OMC- Free Report) and Publicis Groupe SA ( PUBGY- Free Report) in Jul 2013 to create Publicis Omnicom Group. The merger of the world’s second- and third-ranked advertising companies created the world’s biggest communications, advertising, marketing and digital services company with $22.7 billion in revenues.
The deal and the eventual formation of Publicis Omnicom Group toppled WPP Plc. ( WPPGY- Free Report) as the #1 advertising company. WPP has been a leader in the advertising world since 2008.
WPP & PennyWise
WPP’s subsidiary, Ogilvy & Mather (O&M), inked a deal in Sep 2013, with PennyWise Solutions Pvt. Ltd. (PennyWise), an India-based digital technology and production company, to acquire a majority stake in the latter. The deal marks an important milestone in WPP’s efforts to build its presence in the fast-growing markets and sectors.
Millennial Media & Jumptap
Joining the bandwagon, mobile advertising and data provider Millennial Media Inc. ( MM- Free Report) inked a definitive agreement in Aug 2013 to acquire privately-held mobile advertising platform Jumptap, Inc. The combined entity has a complimentary product portfolio that is likely to result in economies of scale in the fast-growing mobile ad market.
Dentsu & Aegis
In Mar 2013, Japanese advertising agency Dentsu Inc. acquired UK-based Aegis Group Plc to form one of the biggest global media and marketing networks. The strategic move was aimed to give competition to behemoths like WPP and Omnicom.
The Possible Upcoming Targets
Apart from the cost-saving benefits, the growing influence of digital media in marketing is also believed to have played a key role in the recent mergers and acquisitions in the ad industry. It is believed that these mergers will lead to greater scale and efficiency in digital marketing.
The mergers are expected to enable the ad firms to collate their resources to work more effectively with major Internet and tech players Amazon.com Inc. ( AMZN- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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