Croud Buys Vert Digital, its 5th Agency M&A Deal
RockWater Roundup
RockWater analysis to make you a better investor and operator. Today we discuss more ad agency M&A in Croud’s purchase of Vert Digital; the deal value prop, Croud’s 5 acquisitions since 2021, and buy strategies for global agencies targeting the US ad market.
————
Croud acquired digital agency Vert Digital, its 5th acquisition in 3 years.
Highlights more UK-to-US capital flows, and interest in Atlanta-based agencies.
Let’s break it down…
👍VERT DIGITAL
- Digital mktg and ad agency
- Based in Atlanta
- Founded 2009 by Kevin Planovsky, Michael Lentz
- Paid media, creative, UX design, CRM, email mktg, analytics
- Serves Fortune 1000 / mid-market enterprise brands
- Mobile-first specialist
💡CROUD
- Digital ad and performance agency
- Based in London
- Founded 2011 by Luke Smith, Ben Knight
- Expanded to NYC in 2016, Dubai in 2022
- $38.5M funding per Crunchbase
- Got LDC investment in 2019 (part of Lloyds Banking Group)
- Network of 2,900 digital marketers (“Croudie Network”)
- 500 in-house specialists
🤝DEAL VALUE PROP
- Helps Croud expand in US
- Diversify client offerings
- Tap into Atlanta as hiring talent pool, new client base
- 1+ year working relationship, proven synergies
- Vert founders become Croud execs
🔎CROUD M&A HISTORY
- Vert Brands: digital agency (Jun 2024)
- Born Social: social agency (Nov 2022)
- impakt Advisors: data & analytics (Dec 2021)
- VERB Brands: luxury digital mktg agency (Nov 2021)
- Metageni: unknown
🧐WHAT I FIND INTERESTING & DEAL INSIGHTS…
No surprise given the broader ad agency consolidation. It’s getting harder to compete for brand marketing dollars.
Reminds me of a few points I wrote in our 2024 State of Agency M&A report earlier this year…
Agencies that have broader, diversified capabilities will win more of those dollars. The market is now about scale across service offerings, team, and geos.
The Rise of Challenger Networks / Nextgen Ad Agencies
These are modern ad agencies with a broad suite of digital marketing capabilities. They’re helmed by seasoned marketing executives, have investor-backing, and are growing aggressively through M&A. Example companies include Stagwell, which has done 6 acquisitions since 2023 (I wrote about their acquisition of Team Epiphany in Jan 2024 here, and most recently they bought a digital PR agency in Brazil which I still need to write about). Another example is Acceleration Group of Companies.
Based on the overview of Croud I wrote above (backed by investor LDC, 5 acquisitions in 3 years, growing set of agency capabilities), I’d include Croud into this category as well.
International Agencies Seek to Buy Way Into US Market
UK-based agencies are aggressively looking to enter the US. My note from our 2024 agency M&A report…
“We’re getting a lot more calls from agencies across the pond who want to make inroads with US brands and audiences. These agencies have had trouble building organically in the States, since hiring an exec team in a competitive high-growth market with a very different agency culture ecosystem is not an easy feat. So buying their way in is a growing mandate. I’ve gotten calls from Euro-based branded content studios to podcast agencies and larger holding companies who are making trips to the US for “agency roadshows” in 1H 2024, and who plan to transact by the second half of the year.”
Since I wrote that, I’ve also gotten calls from Asia-based digital marketing businesses seeking US agency targets, though I do believe there will be the capital flows will be more typically trend towards US-to-Asia, as more America-based co’s seek access to high-growth markets like southeast Asia and others (I know a target that may be coming to market soon!).
Further, it also seems that Atlanta is becoming an increasingly appealing target in addition to NYC and LA-based agencies.
Alright, time to head out for a wedding weekend in Austin. More deal analysis to come next Friday if I can squeeze in a post during Vidcon week!
————
I’m the founder of RockWater Industries. We do financial and strategy advisory for media, agencies, and creator economy. From M&A and fundraising to consumer research and go-to-market planning.
DM me on LinkedIn or email me chris @ wearerockwater dot com
