Economies of Scope in Digital

Gone are the days of booking a holiday on the high street, making expensive overseas calls or watching repeated TV episodes. Online has changed everything. The spread of mobile internet, e-commerce and the development of on-demand streaming have led to a digital revolution and paved the way for a new breed of digital entrepreneurs.

Developments in this area have brought clients, large consultancies and digital companies together. Whereas clients like to take advantage of the flexibility and bespoke solutions that the small and personal nature of a digital agency provides, they prefer to work with large suppliers/consultancies. These larger companies offer improved continuity over annual/ongoing relationships and can handle larger projects, bigger budgets and drive a faster project turnaround time.

Nowadays that larger consultancies can no longer afford to offer their services without a digital component and are seeking a solution to fill this gap. One key example would be the implementation oft he Deloitte Digital team and their acquisition of Ubermind Inc, in order to gain a foothold in the mobile application market. This is of great advantage to the digital agencies set up by entrepreneurs, who  are looking for a large strategic partner.

We expect these trends will contribute to market consolidation and internalisation of digital companies and expertise. The large consultancies wish to buy and the smaller agencies are looking for a strong partner. This is the perfect time for acquisitions.

We are currently working on several projects in the digital market and know of acquisitive international companies seeking strategic partners in the UK. If you would like to learn more about economies of Scale in Digital or discuss any of these opportunities please contact Onno Jol – onnojol@paceequity.com.