Is the influencer agency space ripe for acquisitions?

Recently Publicis Groupe said that it will be acquiring Influential, a global influencer marketing company and platform, authentically connecting brands to audiences by developing, deploying, and optimising creator-driven digital campaigns.  

Influential’s proprietary AI-powered technology platform has over 100 billion data points, coupled with its network of over 3.5 million creators, including access to and data on 90% of global influencers with over a million followers, currently serves more than 300 brands around the world, according to a statement. Under the partnership, Influential’s offering enables brands to source high-quality digital creators, curate impactful creative strategy, and activate, amplify and optimise digital media to drive real-world outcomes. 

Don't miss: Publicis Groupe to acquire influencer marketing platform Influential

By combining those capabilities with the unique data and identity assets of Epsilon, Publicis Groupe will put the leadership of ID-driven influencer marketing in the hands of all its clients through a brand-safe, premium marketplace to directly connect brands with preferred access to millions of diverse creators and their audiences. 

This comes approximately a year after WPP said that it would be acquiring Goat, an influencer marketing agency that specialises in data-led end-to-end influencer marketing campaigns grounded in performance and measurement in 2023.

Other recent influencer marketing agency acquisitions include We Are Social buying a majority stake in Singapore-based influencer marketing agency Kobe Global Technologies to beef up its influencer marketing services across Southeast Asia in 2022. We also saw The Smart Local (TSL) Media Group acquiring X10 Media, an influencer marketing services agency with a presence in Singapore, Malaysia and Indonesia early this year. 

Is there a growing trend?

There has certainly been a growing trend in network agencies acquiring these specialist shops, according to Shufen Goh, principal and co-founder of R3 and president of AAMS.

According to Goh, these can be for a variety of reasons including access to established technology, infrastructure, talent and community expertise. They also provide opportunities for network agencies to level up their social or media offering by integrating this expertise to close the loop.

However, the challenge or risk with any acquisition, but particularly for a specialist influencer marketing company, is the decay of their unique culture and ability to remain agile, Goh explained. 

"As influencer marketing and community building becomes a bigger priority for brands to connect with their increasingly diverse audiences, more of these partnerships and acquisitions seem likely as network agencies look to quickly fill any gaps in their current offering," Goh added. 

True enough, influencer marketing is revolutionising the media and advertising industry and has become a ubiquitous growth driver for brands due to the channel’s unique ability to meaningfully connect with their customers.  

By 2025, social media spend is expected to reach US$186 billion, exceeding global linear TV ad spend for the first time, with influencer marketing as its fastest growing segment, according to Publicis.  

Goh added that clients prefer simplicity, and if influencer marketing can be consolidated with the same team that already activates media or social, it would make sense to do so.

Adding to Goh's point, Karl Mak, co-founder and CEO at Hepmil Media Group said that more acquisitions are a positive signal for the overall creator economy globally. "I am personally bullish that the creator economy is going to continue to gain more significance across markets globally and hence the trend is bound to continue," he said, adding:

Such a big acquisition is a signal that the creator economy is not a flux, in fact it has gained so much momentum that the large network agencies have to make a move to stay ahead of their competition.

Saying that, Mak cautioned that despite this being good for the market, a con for this deal would be that smaller players might be to face greater competition in the market, forcing many to pivot or consolidate to stay competitive against "giants" such as Publicis and WPP.

He added that large agencies have the scale and breadth of offerings that suit a specific clientele that require multi market scaled solutions whereas smaller shops have the agility to provide more bespoke solutions. "At Hepmil we see room for both to play different roles in a fast-growing market which should lead to healthy competition, hopefully sparking off new models and innovation," he said. 

A natural progression

According to former ad man Jeffery Seah, general partner at MSW Ventures, these acquisitions are a natural progression to scale creative and media as marketers now want to “match funnel-building to conversion attribution” – something that was harder to do before data took a front seat in the agency business.

Given that both the media landscape and buying, in the traditional sense, has become more fragmented than ever before, influencers are the closest funnel to deliver business outcomes, explained Seah.

Specifically in Southeast Asia, clients are used to fast, good, and cheap solutions. “With influencers, they have adjusted to fast, good and value-creating partners,” he added.

He shared that today influencers are being used from market research to distribution and conversions. “Agencies in the middle have to create unduplicated value in such tripartite relationships, beyond being an enabler or broker leveraging margins and FTE cost,” he said.

With bigger networks snapping up influencer firms, Seah also believes “marketers will partner with big agencies and/or influencer marketing outfits that can embrace the new 996 (9:00 am to 9:00 pm, 6 days per week) way of doing commerce 24/7”. Having worked closely with content and influencer agencies such as Hepmil and Partipost, he shared that the landscape in SEA is a lot more vibrant in these spaces due to geography acquisition concentration.

Saying that, an influx of acquisitions of smaller influencer agency shops by bigger networks does have its downsides. According to Aditya Aima, managing director, Growth Markets, AnyMind Group, there could be a reduction in the diversity of innovation around influencer marketing, which would have a wider effect on the influencer marketing economy.

"Independent companies naturally need to have a certain degree of innovation in order to raise their competitive edge (and sometimes to survive), and being part of a company with stronger capabilities would reduce this need for innovation," said Aima. He added:

This is also a wider signal to influencer shops that there is an “exit” option.

He added that it really on depends on how brands place influencer marketing as part of their wider marketing strategy and arsenal.

"Network agencies provide crucial capabilities of campaign planning and strategy, where influencer marketing plays a key element alongside other marketing activations," he explained. "On the flip side, influencer shops provide influencer marketing proficiency, but the wider campaign planning capability would either have to come from the brand or an integrated marketing agency."

Related articles:
Nestlé hands media duties for China to Publicis China
DMA Indonesia: Fonterra's tips on getting influencer strategy right in Indonesia
AXA Insurance ID's marketing head on how brands can nail micro-influencer strategies in 2024