As advertising and technology continues to converge, a host of ad agencies from mega firm WPP to Kirshenbaum Bond Senecal + Partners have begun making venture investments into emerging digital media and ad tech startups.
And this week brings news that ad agency R/GA (whose parent company IPG has already been making investments) announced it would launch a fund to invest in startups. So using CB Insights data, we analyzed the investment activity of four ad agency investors – WPP, Kbs+ Ventures (MDC Group), Interpublic Group and Orange-Publicis (OP) Ventures, the venture fund launched by France Telecom-Orange and Publicis Groupe in 2012. Together, the four participated in 47 transactions totaling $421M in disclosed funding between 2010 and 2013. 2014 has seen the four agencies participate in 5 deals worth $82M already pushing their tally past 50 since 2010. (Though relative to corporate media and corporate telecom investors, investing pace has not jumped up).
Of the four, WPP has been the most active over the period completing 26 deals including to Buddy Media, Domo Technologies and Say Media. IPG, which invested early in Facebook, has been least active investing in just a handful of deals.
Geographically, 32% of ad agency deals in the period went to New York-based companies including social ad campaign startup Adaptly and content marketing software firm Percolate. With New York being the advertising capital of the world, the fact that NY is where the most deals happen should not be that surprising. California and Mass. took 21% and 13% of the deals, respectively. Internationally, both China and the UK saw several deals, almost all of which were done by WPP. The mega-agency has continued to invest in the UK in 2014, contributing to a $41M round to retail data software firm eCommera.
Not surprisingly, the ad agencies are most actively investing in advertising, sales and marketing tech, which as an industry took over 1/2 of all deals in the four-year period. And while there are strategic benefits of these investments, some have also already done well for these ad agencies from a financial perspective. WPP, for example, is said to have made over $100M from a $5M stake in Buddy Media (acquired by Salesforce).
We expect more ad agencies will begin investing in private tech companies over time either through the creation of stand-alone corporate venture units or just by opportunistically investing via their parent company.