In August 2016, The New York Times announced the acquisition of Fake Love, a small award-winning digital marketing agency based out of NYC.
This wasn’t their first venture into the agency business. Just a few months earlier, they announced the $12m purchase of HelloSociety, a marketing agency that helps brands leverage the power of social media influencers.
And they weren’t alone. Vice News, Time Inc, and Hearst are just a few of the many publishers that have been buying up agencies.
Commenting on the increase of publisher-agency deals, Yue Tang, a consultant at R3, said, “Publishers are looking at different ways to extend their revenue stream and we see this trend continuing. This year we saw a lot of publishers struggling with generating revenue. But if you’re a good publisher you service both your audience and also your advertisers. Those who can combine the two the best are the ones who are going to survive.”
This trend isn’t just for publishers buying agencies. It’s a two-way street.
Last year, Gary Vaynerchuk’s agency VaynerMedia acquired the niche women’s publisher PowWow and the synergies there were just as clear.
Jesse Brody, partner at Manatt, Phelps & Phillips told AdAge “As publishers have been aggressively going after business that was normally solely in the realm of the agencies and creating native ad and other branded integrations, cutting out the agency altogether, it makes sense that agencies would now react in this way.”
Breaking this trend down, it’s quite obvious why it’s happening. For agencies, their objective is to get their clients in front of their target audience. For publishers, their objective is to create unique content that engages directly with a target audience then retains their attention and trust.
By marrying a proven creative process and team with an established and segmented audience, the agency wins, the publisher wins, the readers win, and, in the end, brand advertisers win.
Just take a look at VaynerMedia and their 50+ person video production arm. While other publishers frantically “pivot to video,” PowWow now has the support of an experienced video production team that can leverage their skillset to create incredible content experiences both for their readers and advertisers. But most importantly, their overhead costs are largely supplemented by the agency’s existing client base. Win, win, win, win.
While the big publishers like the New York Times will keep buying small agencies, we’re obviously not going to see little agencies buying major publishers like the New York Times. They just don’t have that kind of capital. But I do believe we will see a lot of small to medium sized agencies buying up smaller publishers, mostly in the B2B publishing space.
As editorial and advertorial lines continue to blur and the fight for diversified revenue channels and quality content heats up in the years ahead, we’ll see more and more of these deals taking place.