Investing in Europe’s digital services market
After 2023 challenges, digital services are set for 2024 growth, focusing on integrated capabilities, AI, and scaling through M&A.
15/05/2024
CIL’s Media practice, alongside corporate finance advisor, JEGI CLARITY, conducted a comprehensive survey of leading independent businesses in the European digital services market to understand their outlook for 2024 and what opportunities they see for the year ahead. The survey revealed several key findings:
- Cautious Optimism: 2023 was a difficult year for many digital services businesses. However, there is cautious optimism for 2024 given improving economic conditions with strong single-digit market growth expected.
- Integration: 59% of respondents expect a shift toward a unified brand with divisional sub-brands as key to integration. For multi-agency groups, integration will be a key focus for 2024, with the aim to drive top-line growth (as well as realize back-office synergies).
- Marketing Services vs. Marketing Technology: There was 55% net positive sentiment in marketing services for 2024 vs. 45% in technology. Sentiment is most positive in marketing services where budgets are expected to bounce back faster and be deployed more rapidly.
- M&A to Drive Growth: 89% of respondents are considering near-term M&A to support geographic and operational expansion. Businesses anticipate that M&A will be a key driver for growth in 2024.
- Valuations Remain Robust: While M&A activity was down in 2023 (20% lower than in 2022), valuations remained robust. Strong valuations are expected to continue into 2024 even as volumes pick up.
- Artificial Intelligence: 60% of respondents are already implementing AI in internal or external workflows. While nearly all interviewees recognize the long-term opportunities and threats, most believe that short-term disruption will be muted.
