There is little that is "normal" or even familiar about how businesses have flexed and, in many cases, upended the traditional ways in which they conduct business. The business of mergers and acquisitions is no different.
There is little that is “normal” or even familiar about how businesses have flexed and, in many cases, upended the traditional ways in which they conduct business. The business of mergers and acquisitions is no different. On its face, a world-wide pandemic would be the worst possible time for an organization or holding company to take on the weight of any potential risk. However, a closer inspection shows that the pandemic hasn’t so much hampered business operations as much as it has forced us to examine the potential of what could be essentially reshaping the future of how we operate.
To truly understand the impact of acquisitions in 2020, we’d be wise to look back at 2019, the year of tech acquisitions that, on some level, impacted the performance industry. 2019 made for some big-ticket headlines, including Salesforce acquiring Tableau for $15.5B, Google acquiring Looker for $2.6B, Sprinklr acquiring Nanigans for $1.5B, Campaign Monitor bought Sailthru, Liveclicker WP Engine bought Flywheel, Hubspot bought PieSync—the list goes on.
In many ways, 2019 can also be credited as the year that opened investor eyes to opportunities lying in wait. The growth of e-commerce, as reported by eMarketer in October, jumped over 30%—catapulting the online shopping shift projections (for perspective, Best Buy and Target are both expected to surge more than 100%). But marketers were still under pressure to deliver. As a result, there was greater emphasis and interest in performance channels and models that offered risk insulation: paying only on conversion. Thus, affiliate and content became a primary focus for marketers looking to extend and expand audience reach and achieve scalable customer acquisition.
Acquisitions within the channel began to kick off straight away in January 2020. We’ve seen PayPal buying Honey for $4B, TUNE got acquired by Constellation Software (who bought CAKE about 12 months earlier), Skimlinks was acquired by Connexity (who finds new customers for big brands), Vision7 acquired All Inclusive Marketing, NerdWallet bought UK-based Know Your Wallet. Moreover, RetailMeNot is being sold for +$400M, and Intuit is looking to purchase Credit Karma (in a yet-to-be sealed deal). There’s little question over whether e-commerce growth propelled many of these performance marketing acquisitions as it most certainly did.
Notably, in many of the acquisitions in 2020 (and 2019, for that matter), a central pattern has emerged: the consumer is in control of their buying journey. They have declared that content is king and demand more personalized experiences. There is a strong sense that absorbing companies that can either provide reach and audience access at scale or punctuate technology and data capabilities are critical to maintaining position and relevance.
But while e-commerce growth may have played a large role in many of 2020’s performance acquisitions, Covid-19 also played an undeniable role in reshaping consumer preference and changing behaviors that also added fuel to the acquisition fire. Rapid e-commerce growth combined with a shift in consumer sentiment makes performance channels a viable, better choice for brands—and this is a win for performance marketing providers and acquisitions.
Take for example, the recently announced acquisition of Vancouver-based affiliate marketing and program agency, All Inclusive Marketing (AIM), who was acquired by Vision7 International as part of its purchase. If the future of marketing wasn’t evident before, moves like these certainly help to clear doubt: traditional marketing companies (and non-traditional marketing companies) realize the critical importance that having a performance-based solution in their portfolio plays in achieving business outcomes. For the more than 80% of marketers and 84% of publishers that currently adopt affiliate in their marketing mix, this comes as no surprise. Affiliate marketing—now residing as a critical arm of the broader category, partnership marketing—has been delivering an outcome-based model since its inception.
Adding to this list is the close-to-home acquisition of Pepperjam by Partnerize. Partnerize’s tech uses automation to help clients optimize their relationships with marketer partners, like affiliates (publisher partners), e-commerce ad deals, or influencers. Pepperjam holds an affiliate technology platform with a network of more than 250,000 partners, including content and influencers. Last year, Partnerize raised $50M and subsequently acquired BrandVerity, a trademark monitoring and compliance tech company. There’s a clear trajectory: Brands are taking more control over performance channels like affiliate or influencer marketing. This path is especially true for retail and consumer brands that are ramping up e-commerce or direct-to-consumer (D2C) businesses.
So, what does the future hold for these acquisitions? The truth is that it may be too early to place bets on any outcomes. On their face, most of these 2020 acquisitions represent consolidations in our space, but moreover, they represent a significant investment from both industry insiders and outside capital. Workforce reduction, while a common (albeit unpleasant) practice is an organic part of many acquisitions, they eventually work themselves out to “right-fit” the organization’s position in the market. And while COVID-19 certainly threw a wrench in best-laid plans, slowing processes down somewhat, the aforementioned 2020 acquisitions mentioned above signal that we have rather deftly figured out how to buy a company over Zoom, and it hasn’t slowed down mergers and acquisitions in the least bit.