Back to top

Accenture Completes Fjord Buyout

Read MoreHide Full Article

Management technology outsourcing and consulting service provider, Accenture plc (ACN - Free Report) recently completed the acquisition of U.K.-based design agency, Fjord. The acquisition, which was announced on May 7, 2013, was aimed at bolstering Accenture's design and marketing capabilities. Financial terms of the deal were kept confidential.

Founded in 2001, Fjord evolved as a service design consultancy. It has been engaged in the task of developing creative and customized designs to make understanding of complex systems easier. Fjord has redesigned and developed PayPal’s mobile apps. Apart from this, Citibank, Harvard Medical School, Qualcomm (QCOM - Free Report) and Telefónica, BBC and Banco Bilbao Vizcaya Argentaria (BBVA - Free Report) are counted as its blue chip customers.

Fjord’s capabilities will be added to Accenture Interactive platform, which is the company's marketing-services arm. Accenture Interactive was formed in 2009 (in association with its client Procter & Gamble Co.) in order to deliver superior consulting, technology and analytics services mainly to chief marketing officers (CMOs).

Fjord is well known for its expertise in designing hybrid platforms (smartphones, tablets and PCs) and for creating dynamic services. Post integration, Accenture Interactive and Fjord are expected to offer a comprehensive digital marketing solution that would help clients to formulate marketing strategies.

Competent marketing is the key to success for every organization. Marketing and digital executives of a company are responsible for developing digital marketing campaigns, marketing contents, e-commerce and marketing operations. Accenture Interactive is a well-integrated platform that helps CMOs devise marketing strategies and derive higher ROI (return on investment) from it.

Apart from Fjord, Accenture took over Hong Kong-based online marketing consultant, Acquity Group Ltd. (AQ - Free Report) for roughly $316.0 million in cash (in early May) and digital production services vendor avVenta Worldwide (Oct 2012) to enhance its interactive platform. These acquisitions will enable Accenture to address the critical needs of CMOs while digitizing their marketing plans.

According to U.S.-based IT research firm Gartner Inc., firms generally spend 2.5% of their revenues on digital marketing and the spending is expected to go up by roughly 9.0% in 2013. One more important statistics from Gartner is that around 50.0% of the digital marketing activities get outsourced.

Considering the growing need for digital marketing, we expect Accenture’s investments in its digital and marketing capabilities to pay off soon.

We are encouraged by Accenture’s strategy of growing through acquisitions. However, increasing competition from IBM Corp., a strained spending environment and Accenture’s broad European exposure (roughly 40.0%) may temper its growth prospects to some extent.

Currently, Accenture has a Zacks Rank #3 (Hold).

More from Zacks Analyst Blog

You May Like