DM M&A Activity Up, But Total Value Down

The direct marketing industry generated $19.7 billion in transaction value among the 398 deals tracked by investment bank Petsky Prunier during the first half of 2008. While the number of transactions jumped 21% from the first half of 2007, the value of the transactions fell from $26.8 billion a year ago. The drop was in part due to the soft economy, and in part due to two exceptionally large transactions a year ago.

Ranked by value by sector, the 78 deals within the digital media sector accounted for $6.3 billion, followed by the 26 transactions in the information industry, which amounted to $4.8 billion. The marketing technology field’s 133 deals amounted to $3.8 billion, and 87 agreements within interactive advertising generated $2 billion.

Among the smaller sectors, marketing services pulled in $1.9 billion for its 39 deals, while advertising and promotions and out of home and specialty media generated 35 transactions, at a cost of $1 billion.

America Online, Microsoft and WPP Group led the pack with five transactions each, followed by Aegis Group and Havas Advertising with four, and Buzznet, IAC/Interactive, Interpublic Group and Neilsen, with three apiece.

Reed Elsevier’s $3.9 billion acquisition of ChoicePoint was the largest transaction of the first six months of 2008.

Within the various segments, digital media was the fastest-growing segment, with deal values in this category tripling from $502 million to $1.5 billion. Information firm transactions grew 43%, to $4.8 billion, while marketing technology agreements jumped 25%, to $3.8 billion.

“Venture capital investments, in particular, are on the upswing,” said Micheal Petsky, a partner at Petsky Prunier, in a statement. “We expect that pattern to continue for the second half of the year, particularly as categories like user-generated content and content management mature and open up new opportunities in digital services.”