MOBILE MARKETING AND ADVERTISING M&A

In Berkery Noyes’ first quarter 2012 Online and Mobile press release, we discussed M&A surrounding mobile marketing and advertising. Digital marketing, examined as a subset of the e-marketing and search segment, experienced a seven percent increase in M&A activity in the first three months of 2012.

In particular, we noted SingTel’s acquisition of Amobee for $321 million. Amobee just made its own acquisition, buying AdJitsu from Cooliris nearly a week ago. This acquisition will allow Amobee to leverage AdJitsu’s 3D mobile ad technology. One key aspect of product development in mobile advertising, as indicated by Amobee’s acquisition of AdJitsu, is for companies to make ads more interactive – with the end goal of increasing consumer engagement and brand loyalty.

There have been other recent deals in this space as well. For example, Monster Offers and Ad Shark announced last Wednesday that they have agreed to merge. Ad Shark is a subsidiary of Iconsys, an app technology developer. This transaction indicates a strategic fit between a daily deal analytics aggregator (Monster Offers) and a mobile advertising platform (Ad Shark).

With the ongoing need for technological innovation this nascent market, M&A provides a logical pathway for companies to attain the necessary expertise and cutting edge tools that will place them in a strong position going forward.

LOCATION BASED APPS AND SOCIAL DISCOVERY M&A

Facebook has made several recent, albeit distinct, mobile acquisitions leading up to its initial public offering (IPO). We’ve discussed the acquisitions of Instagram and Tagtile in our previous posts. With its latest acquisition, Facebook has gained a new technology in the “social discovery” space.

A few days ago, Facebook acquired Glancee, a location based and social discovery app for iOS and Android. Glancee matches users based on interests they have in common or that are relevant to one another. The tool aims to reveal hidden connections. According to PC Magazine, Facebook was also interested in Highlight, one of Glancee’s larger competitors.

Another similar transaction this year was Groupon’s acquisition of Ditto.me, a social recommendation app. Going beyond the check-in feature of many location apps, Ditto.me allows users to ask their friends for suggestions on everything from places they should visit to restaurants they should patronize. As indicated in Berkery Noyes' first quarter Media and Marketing press release, Groupon has been an active acquirer in 2012, completing five Information Industry transactions so far. 

ONLINE AND MOBILE PHOTO SHARING M&A

There’s been a lot of discussion lately about Facebook’s announced acquisition of Instagram for $1 billion. The product nature of the deal was similar to AOL’s acquisition of Hipster, an iOS and Android photo sharing app, for an undisclosed sum. 

What’s not as obvious is that some smaller photo sharing transactions have been occurring as well. For instance, Shutterfly, an Internet-based social expression and publishing service, is planning to acquire Kodak Gallery’s online photo sharing platform for nearly $24 million.

In the month prior to Shutterfly’s announcement, Imaging Spectrum acquired Express Digital Graphics. Express Digital’s products – which include Darkroom Software, Photoreflect.com, and Labtricity – are tailored to professional photographers. Instagram and Hipster, meanwhile, are used by everyday mobile users.  

One interesting mobile app deal, RadiumOne’s acquisition of Focal Labs, occurred in the fourth quarter of 2011. With this transaction, RadiumOne is gaining Clixtr and PicBounce, two apps that allow users to share their photos more easily.

ONLINE AND MOBILE FIRST QUARTER 2012 TRENDS REPORT

Berkery Noyes has released its Online and Mobile M&A trends report for the first quarter. Here is some commentary from our managing directors:

The only top ten E-Marketing and Search transaction in Q1 2012 was Singapore Telecommunications’ (SingTel’s) announced acquisition of Amobee for $321 million. “With this acquisition, SingTel is gaining a compelling range of technical expertise that should enable the company to benefit from the growing mobile advertising market,” said Berkery Noyes managing director Mary Jo Zandy. “Coupled with the proliferation of smartphones and the resilience of many emerging economies, M&A activity in mobile advertising appears to be robust for the foreseeable future.”

Regarding mobile advertising technology companies that serve large enterprises, advertising executives are embracing a product development model that encourages them to collaborate with technical experts on a more regular basis.

Although M&A in the Communications segment remained nearly constant during the last three months, transaction volume rose 70 percent relative to Q3 2011. According to Tom O’Connor, managing director at Berkery Noyes, “there were several interesting first quarter Healthcare transactions in the Communications segment. Besides Nuance Communication’s acquisition of Transcend Services, Lumeris and three Blues Plans acquired Navinet, the nation’s largest real-time Healthcare communications network.” 

RETAILERS ARE BUILDING THEIR OWN DIGITAL MARKETING DIVISIONS

As we noted in our Online and Mobile Industry M&A press release, large retailers are becoming increasingly active in digital marketing. We mentioned Walmart’s acquisition of Kosmix Corporation, a social media company, for $300 million. Kosmix is now part of @WalmartLabs, the retailer’s social and mobile commerce platform. In early January, @WalmartLabs acquired Small Society, a company that helps organizations create iOS applications for Apple devices.

Other retailers have completed deals related to digital marketing as well. For instance, The Home Depot announced its acquisition of Redbeacon.com on January 20th. 

Redbeacon utilizes technology that connects homeowners to local service professionals. As an example, Redbeacon's algorithm is capable of incorporating data from a consumer’s Facebook account in order to make tailored suggestions on which professionals users should hire.

In addition, online retailer Amazon.com acquired Quorus in the fourth quarter of 2011. Quorus develops marketing and social shopping applications for retailers, allowing companies to communicate and live chat with prospective customers based on the products they’re interested in purchasing.

These acquisitions by Walmart, The Home Depot, and Amazon.com shows there’s interest among retailers in growing market share by expanding established brands through social media.