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Accenture Takes the Inorganic Way to Boost Digital Marketing

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Accenture Plc (ACN - Free Report) has opted for an inorganic path for enhancing its digital marketing capabilities. Over the last five years, Accenture has acquired 17 businesses and integrated into this segment.

Moreover, the company recently entered into a negotiation to acquire Altima — a France-based digital commerce agency — which is specialized in customer experience design. If the deal materializes, Altima will mark its 18th buyout. Other recent notable acquisitions in the space are Karmarama and SinnerSchrader AG.

In our opinion, these acquisitions have helped Accenture in providing end-to-end digital marketing services, bringing in a deeper and broader set of digital solutions to its clients. Also, the strategy has helped it diversify its offerings and expand its foothold in new markets.

Industry Forecasts Support its Strategy

The increased penetration of Internet, PCs and smartphones has enhanced the scope of digital marketing. It should be noted that competent marketing is the key to success for every organization.

According to the U.S. IT research firm — Gartner Inc. (IT - Free Report) — companies spent nearly 12% of revenues for marketing in 2016, of which spending on web, digital commerce and digital advertising were the top three categories of marketing. The report also suggests that 65% of the companies are planning to increase their 2017 digital marketing spending.

Our Take

Considering the growing need for digital marketing, we anticipate Accenture’s investment in digital marketing capabilities to be conducive to long-term growth. The company, in 2009, formed Accenture Interactive to tap the growing prospects in digital marketing space. Its Interactive platform is specialized in providing consulting, technology and analytics services to chief marketing officers (CMOs).

The frequent acquisitions help the company in effectively competing with other digital marketing service providers, such as International Business Machines Corp. (IBM - Free Report) , Dell and Deloitte.

Going ahead, the company has applied similar approach for enhancing its capabilities in implementing Salesforce (CRM - Free Report) -based software solutions. Accenture has acquired seven businesses in this space.

We believe the strategy will significantly contribute to the company's revenue stream over the long-run.

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