COMING FROM BEHIND, REGIONALLY SPOKEN
The importance of digital has definitely not been lost on WPP. Recent annual assessments of worldwide merger and acquisition (M&A) trends in the communications industry by New York-based investment bank and M&A consultants Coady Diemar cite WPP as one of the most active acquirers in the digital space for more than two years, competing for inorganic growth leadership against ad group rivals Publicis and Dentsu but also against tech contenders such as Google, Facebook and Yahoo!. In their latest published assessment of the industry in the first half of 2015, Coady Diemar says that M&A activity in digital media, information and technology saw a 24 percent year-on-year increase within an overall vibrant global market for acquisitions; it added that strategic acquisitions in the first six months of last year represented more than two thirds of announced transactions with available data. Transactions attributable to private equity investors increased from 21.7 percent in the first half of 2014 to 32.5 percent of announced transaction values in the same period in 2015.
WPP appeared extremely eager to expand its digital footprint, as evidenced in various financial news releases posted in 2015 on the WPP website. News releases from the five last quarters until end 2015 showed close to 20 items on acquisitions or investments into digital agencies and more than 10 items on investments or acquisitions of companies focused on data and CRM analytics. According to those releases, the group has already passed the 30 percent mark of digital contributions to its $19 billion global turnover and aims to increase the share of digital from 36 percent, or $6.9 billion, of its annual revenues in 2014 to 40–45 percent in the next five years.
However, these ratios are still quite far for the advertising industry in MENA. Despite loads of chatter over the alleged catalytic role of digital communications in the Tahrir uprising and other Arab Spring events five years ago, MENA has been a laggard in digital marketing communications when compared with other world regions. This lateness, which has been discussed in many a regional advertising industry gathering of the past five years, has been quantified in estimates of digital advertising at around 10 percent of the MENA ad market in 2014. tal agencies that Cleartag will, according to Haddad, be a part of. Mirum, with its head office in Hong Kong, says on its website that it has presence in 20 countries and 46 offices. Not only does neither count yet include Lebanon and Beirut at time of checking in late December but, more tellingly, the only Middle East presence of a Mirum company until the end of 2015 was the Dubai office of UKbased HeathWallace, a digital specialist which WPP acquired in 2008 and which expanded into the United Arab Emirates in 2013.
In the overall picture of its investments into companies in emerging economies, WPP, according to its financial news releases, seems particularly hungry for digital market share in places such as China, India, Brazil and South Africa. Combined with acquisitions of digital and data capabilities in mature markets, WPP creates an impression of overall digital expansionism in which the Cleartag story looks like but one, and not very large, stone in the group’s communications and marketing mosaic.
SECRECY ON CASH VALUATIONS
This analysis of the rather humble position of Arab markets and Lebanese digital providers in relation to trends in the global advertising industry does not make the Cleartag transaction less interesting, however, and especially does not subtract anything from the partnership’s role as an example that other digital agencies in Lebanon might seek to follow.
In this regard, the rationale and the reward of an entrepreneurial company’s sale are two issues of primary interest to other members of an entrepreneurship ecosystem. For Dajani and Haddad,