SEM Industry Consolidation – The Trojan Horse Is Deployed

High Position Ltd has once again come under the spotlight due to their continuing success in organic search positioning; this time the bid to purchase the company has come from a leading Scandinavian company who specialise in complete IT solutions including marketing and hosting platforms. The bid has been turned down by the High Position management team, managing director Steve Dart released the following short statement: “High Position Ltd are flattered by the attention we are receiving from major players in the market, we feel that our ongoing success in search positioning and the rapid acquisition of corporate clients has made us the envy of SEM agencies worldwide, we expect to receive further interest from the industry as we progress our comprehensive corporate client base”.

The market speculation about consolidation in the search industry is gaining momentum especially after the recent acquisitions of two other leading SEM agencies, this particular bid is of interest as it shows once again that the growing UK search marketing industry is a lucrative and enviable market. The “quoted” Scandinavian company is looking to capture a share of this market and would be following the recognised strategy of other large organisations that are now targeting this industry sector.

Of course this consolidation will be driven by the larger companies looking mainly to strengthen their overall suite of marketing services or by adding value to an existing service where it is performing poorly, what is interesting here is that there is a desire for companies to want to move into the UK market using the acquisition of an SEM company as a ‘Trojan Horse’ for the UK market. There is evidence that existing Media companies servicing US markets are looking to use the digital path to get offline advertising services into the UK market, similarly hosting companies, networking and general IT companies are all eyeing up this market space so they can target the rapidly growing UK market from within.

Additionally an established European ‘quoted’ company has much to gain in PR by announcing its introduction to a growing and valuable UK market, an appreciable rise in share price will often accompany an announcement of a serious step into this space and if the purchase is for a well known and established purveyor of digital marketing services then it is likely to push added value rapidly for their shareholders and this is definitely a driver at present.

The interesting twist on this is that whilst traditional UK advertising agencies are slow to step into the UK SEM market the overseas companies hungry for a share are not, some of these will acquirers will undoubtedly be IT based but some will be general advertising companies. It is likely that by the time UK advertising leaders truly switch on to the fact that they currently cannot provide a complete digital experience for their clients the cherries in the industry will be owned by their overseas competitors and will lament the missed opportunities they had to step in first.