Interactive: what investment bankers say will drive direct-marketing growth.
E-marketing growth this year will occur through continued intertwining with direct marketing (DM). So say the mergers-and-acquisitions (M&A) experts at investment bank Petsky Prunier. Closer alignment of the disciplines addresses client demand for multi-channel communications. Increased technology use helps clients meet the need for accelerated speed to market.
The bank's most recent annual report on DM industry corporate transactions takes a close look at 2002 activity. E-marketing predictions are the highlight of their prognostications for the coming year.
Last year's 557 M&A transactions, totaling some $24.8 billion in aggregate value, break into four subgroups:
According to the bankers, the economic downturn was at the root of two "spending" trends that dominated in 2002. Acquisitions (long-term spending) were used to advance strategies; marketing budgets (short-term spending) favored retention over acquisition.
Strong companies, facing a stalled economy with lackluster prospects for top-line growth, used acquisitions to push themselves along strategic paths. Increasingly broad eBay bought online billing provider PayPal for $1.5 billion. Online ad networks ValueClick and BeFree merged into a single entity with $270 million in initial public offering cash. Liberty Media consolidated the interactive TV space, gobbling up OpenTV, ACTV, and Wink Communications. Barry Diller slipped Ticketmaster into USA Interactive's transaction-focused portfolio. Buyers in 2002 strengthened their company's core competency.
A "sideways economic picture" undercut budgets for customer acquisition. It stalled revenue growth and undermined profitability of companies focused on acquisition services: list service bureaus and media and creative agencies. Meanwhile, marketers allocated more budget to retention, cross-selling, and customer development. That buoyed CRM, statement processing, niche fulfillment, call centers, and related service providers.
Of nine trends Petsky Prunier says portend another robust year for DM M&A and equity investment, three involve e-marketing:
Skepticism must be applied, of course. The bankers who make these predictions earn their living providing advisory services to buyers and sellers of DM, marketing services, and information companies. There's a vested interest in promoting corporate transactions as a means to achieving business goals. Certainly one of last year's lessons taught us all to be cautious of pronouncements from the capital community.
Still, these guys are in the thick of it. They're neither the first nor the only players to make these observations. Each predicted trend -- multi-channel communicating, speed-to-market value, and customer-acquisition specialists -- has important potential in its own right. In all three, the online dimension does not stand apart but is sewn into the solution to the client's business problem.
It's a sign of maturity that e-marketing as such is disappearing into the increasingly dominant paradigm of solutions-focused communications services. Dot-coms require adult supervision. Sometimes, getting older is a good thing.
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