This M&A trends report is part of our ongoing analysis of recent mergers and acquisitions through the lens of Pathmatics Explorer. We previously looked at tech acquisitions by Uber, Google Cloud and Paypal. Today we’ll look at how Morgan Stanely and BuzzFeed were able to stay competitive during a recession thanks to their M&A deals.
It’s interesting how sometimes when the going gets tough, some falter, some thrive. Nowhere is this more true than in business. Contrary to what one would assume, recessions can be really good for some. While others sink and suffer through hard economic downturns, strategic brands can shore up opportunities that ensure not only will they make it through okay, but actually grow beyond what would have been capable during normal times.
Sometimes these moves were made with recession-proofing in mind, other times they were not. But regardless of the motivation, as we’ll see below, there’s little doubt that businesses that partake in mergers and acquisitions will nearly always find themselves better positioned than those that don’t.
Let’s see this in action by examining some recent high profile M&As using Pathmatics Explorer, and see what insights we can find behind these deals.
1. Morgan Stanley Acquires E*TRADE
In an all-stock deal valued at $13 billion and finalized in October 2020, Morgan Stanley acquired E*TRADE.
This entry into online brokerage came a year after Charles Schwab announced it would buy Ameritrade for $26 billion, fueling competition between the two financial service heavyweights. Both deals ended up being very fortuitous, as the pandemic saw a boom in individual investing that led to an unprecedented rebound of the stock market. Much of this was driven by an influx of newly minted day-traders, bored, quarantined and flush with stimulus funds.
Let’s take a look at how Morgan Stanley’s acquisition of E*TRADE impacted both company’s using Pathmatics Explorer to examine their online advertising.
Looking solely at Morgan Stanely, you wouldn’t actually even know anything happened. Their top ad creative post-acquisition shows that the investment bank was still leaning heavily towards promoting its advisor-driven investing services.
But while Morgan Stanley's digital advertising analytics show little in the way of impact caused by the acquisition, E*TRADE’s is a different story.
Above, we see in the 12 months surrounding the acquisition, E*TRADE spent $106 million on digital advertising. The majority of this went to Desktop Display. Notably, following finalizing the acquisition in October 2020, E*TRADE’s advertising spiked drastically. They continued to focus on promoting ads via the same channel, but upped their spend from around $7 million prior to as much as $14 million following.
The takeaway? Despite the merging of the two companies on paper, Morgan Stanely and E*TRADE both plan on operating individually of one another. A sound strategy for a company looking to grow market share in both the online-based investing and adviser-based investing spaces, respectively.
2. BuzzFeed Acquires HuffPost
In November 2020, BuzzFeed acquired HuffPost from Verizon Media in a stock that gave them a majority holding. (Verizon retains a minority share.)
Under the agreement, BuzzFeed and HuffPost will syndicate content cross-platform and look for joint advertising opportunities. Though as of yet, Pathmatics Explorer didn’t find any major instances of joint advertising. However, that doesn’t mean we can learn some valuable insight by looking at their online advertising trends.
Specifically, we can see how the writing might have been on the wall for this acquisition.
It’s clear that HuffPost was struggling over the past couple years. In 2020 they lost $20 million alone. Something that was reflected in their advertising.
HuffPost spent $6 million on advertising. Most telling is where that money went. In the chart above we see an erratic spend strategy from one channel to the next, usually a sign of not finding success with any of them.
(It’s also worth noting that their advertising all but flatlined immediately before and following the BuzzFeed purchese.)
For comparison, let’s take a look at BuzzFeed’s ad spend over the same period.
BuzzFeed spent $65 million (almost $60 million more than HuffPost) on advertising during that time. No only that, but their advertising is far more consistent, targeting primarily Facebook and Instagram. A strong indicator that they were finding success with those channels. Tellingly, there was a dip in Facebook spend from March to June 2020, at the start of the pandemic. In response, BuzzFeed appears to have used Instagram to pivot messaging which eventually resulted in an uptick in Facebook advertising that now closely mirrors their spend rate on Instagram.
Two different companies trying to stay alive in the struggling media industry. Two very different outcomes. Looking at the charts above it would not have been hard to predict which of the two would survive.
With over a decade of experience across digital marketing, content, creative, and PR, Sarah is a creative and dynamic thinker who loves to delight clients with unique and relatable content. Sarah graduated from UC Berkeley with a BA in Sociology.