2015 Marketing Services Risk Factor Report
01 December 2015
The 2015 BDO Marketing Services Risk Factor Report released today suggests consolidation in the sector will be turbo-charged in 2016 as a new era of mergers takes hold. The research predicts deal activity in the sector will jump by 11%, from 532 deals in 2015 to 589 in 2016, as companies are impacted by key risks.
The survey of 50 companies across 10 markets, supplemented with in-depth executive interviews, has identified five key challenges that sector leaders will need to navigate in order to protect their margins and market share. Failure to do so could leave firms, particularly those in the crowded mid-market, vulnerable to M&A offers.
The key challenges are grouped by:
- Macroeconomic and liquidity risks
- Changing customer demand
- Competition risks
- Technology and skills risks
- Regulatory risks
Andrew Viner, Leader of BDO’s Global Media & Entertainment team, commented: “Advertising and marketing companies are the sales experts, but in 2016 these companies will be the ones in the shop window. We’re predicting an 11% increase in deals in this sector with those in the mid-market likely to be the most attractive assets. These businesses need to be ready, either to prime themselves for a sale or to stave off an M&A”.
The uplift in deals will reverse the 3% decline that occurred between 2014 and 2015, in part caused by the slowing of emerging market such as Russia, Brazil and China, as well as geopolitical shocks such as the European refugee crisis.