USER EXPERIENCE | Market Insights - Proventis Partners
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USER
EXPERIENCE | Market Insights
2020
© Proventis Partners
USER EXPERIENCE
EXECUTIVE SUMMARY
• The digitization of sales markets has led to an unprecedent existence of company
and consumer data. In this environment, the supremacy of the digital giants Google,
Amazon, Facebook, and Apple has impeded competition for other digital businesses
– digital advertising efforts do not translate to a proportionate growth in profit. Thus,
a positive user experience has become a main means of differentiation and sales con-
version. This new market environment is called the Experience Economy.
• As customers in the Experience Economy demand for a convenient and peerless expe-
rience while interacting with a vendor, issues of customer experience grow in import-
ance. A major element of this customer experience is the User Experience. It describes
a user’s thoughts and feelings while interacting with a digital interface. In the context
of the Experience Economy, this User Experience advances to one of the most vital
aspects of a digital business, driving sales through customer conversion.
• We observe 9 major M&A deal logics within the UX market:
1. Large Data Providers – such as Nielsen or Neustar – acquire providers of user
analysis or data management technology. They use this technology to levera-
ge their existing data resources, thus improving their data services and expan-
ding their service portfolio.
2. Technology Giants – such as SAP or Oracle – acquire DMP, User Analysis and
Content Optimization technology vendors. These acquisitions function as spot
solutions to the existing portfolio and help build holistic marketing platforms.
3. Consolidation takes place within the data-driven UX segment, especially for
providers of data platforms and providers of marketing performance attributi-
on and optimization.
4. Consultancies and service providers – e.g. Dentsu Aegis or ServiceNow –
acquire technology providers to improve their software-enabled services and
to expand their service portfolio.
5. Stakes in UX technology providers are acquired by strategic investors that
would typically be customers or users of the technology.
6. User Analysis and Content Personalization technology also represent an op-
portunity for financial investors.
7. As user demand for more intuitive interfaces, software vendors and software
developers acquire UX design agencies in order to improve their own fron
tends.
8. IT service and management consultancies acquire UX design agencies to com-
plement their existing expertise portfolio.
9. Media agencies acquire UX design agencies to gain scarce HR resources in the
UX field as well as to deepen their expertise in digital aspects of media design.
TABLE OF CONTENTS 1. User Experience – an essential concept for any digital business 05 2. The data driven and design driven UX value chain 0 08 3. Mergers & Acquisitions in the UX market 13 3.1 Data driven segment 13 3.2 Design driven segment 29
1. User Experience –
an essential concept for any digital business
What is UX why is it so important for any transactional business?
User Experience (UX) encompasses all aspects of the end- und thus on the entire economic viability of the business.
user’s interaction with a company, its services or products. However, ‘luck’ is not the decisive factor. Instead, tech-
In fact, there are numerous definitions for UX. For the nology and design can help do the magic. Unsurprisingly,
purposes of this paper, we will concentrate on Website KPIs it is top of mind for most thriving transactional bu-
UX. UX goes way beyond ‘usability’ and ‘user interface siness models and a lot can be learned from players who
(UI) design’ and - although these are important compo- constantly endeavor to optimize UX and regard it almost
nents - areas to look at include data management and as an art form.
analytics. In an increasingly crowded space and with ever-increasing
User Experience has a massive impact on many critical customer expectations, companies who have an edge in
KPIs. In e-commerce, UX means conversion and – if we UX over their competitors will be on the winning side.
are lucky to keep the customer until the the bottom of
the funnel is reached – it has a significant impact on sales
What do you view as the most important business benefits
of improved user experience?
Increased sales / conversion 74%
74%
Increased customer satisfaction 72%
71%
44%
Increased customer loyalty 43%
Strengthening our brand 31%
29%
Reduced operational (e.g. customer service) costs 24%
25%
Reducing cost-per acquisition (CPA) 17%
%
16
Client-side respondents
9%
Reduced development and design costs 12%
Agency respondents
Other 1%
1%
05
What people value most in their customer experience
60,0%
Efficiency
50,0%
Friendly service Convenience
Wort paying for more
40,0%
Up-to-date technology
Loyalty program Knowledgeable service
Unique experience
30,0%
Easy payment
Human interaction
Social responsibility
20,0% Personalization
Fun
Design Easy mobile experience
Charitability
Brand image
10,0% UX aspect
Global presence Atmosphere
Other CX aspect
Automation
0,0%
50,0% 55,0% 60,0% 65,0% 70,0% 75,0% 80,0% 85,0%
Level of importance for customer experience
Why UX is one of the main sales drivers in the new Experience Economy
Digital market environments with online market- Similarly to the supply-side, consumer data is also widely
places, test portals, and price comparison platforms available through a plethora of data sources. Companies
have led to an unprecedent availability of compa- operating on digital markets need to utilize this data in or-
ny, product and service information. As products and der to boost customer conversion. That is since the supre-
competitors in these markets often are highly com- macy of the tech giants (Google, Amazon, Facebook, Ap-
parable, consumers are demanding for a unique expe- ple) has increased the cost of user generation drastically.
rience that drives differentiation and trustworthiness.
But, as a recent study shows, only 2 of 5 companies collect
A recent PwC study on consumer behavior shows that half experience data. Moreover, a third of these companies do
of online consumers are willing to pay more for a positive not use the captured data for the operational management
mobile experience and are rewarding design elements in of the firm and only 1 of 20 companies actively connects
their experience. In times, where almost a third of consu- experience data (X-Data) with operational data (O-Data).
mers buys products online at least once a week, this ma-
kes UX a major sales driver for digital market revenues.
Together, these circumstances of digital market environments establish the current Experience Economy.
Source: PwC, Source: econsultancy
06
USER EXPERIENCE
2. The data driven and design driven
UX value chain
The nature of the Experience Economy puts pressure on The following segments highlight the fields of action re-
companies to deal with the intelligent control of user in- garding UX optimisation for websites and webshops as
teractions and its combination with operational business well as software products that only directly increase the
processes – a professional Experience Management is re- conversion rate, but also have an impact on other criti-
quired. cal KPIs such as repurchase rates, recommendation rates,
NPS, time on site as well as brand recognition values.
a) Data-driven segment
CUSTOMER DATA
Problem: Digital market players do not know who their most important target audience groups are. These companies
therefore must collect, administer and store user data. This data typically can be found in several sources, such as CRM
systems, webtraffic or external sources.
Solution: To take hold of the relevant data in one place, companies store this user data in so called Customer Data Plat-
forms CDPs or Data Management Platforms DMPs. In the databases, first party customer data is being enriched and merged
with third-party data from external Data Providers.
Benefit: Companies create a single point of truth for experience data.
CDP/DMP vendors: Allsight, Blue Conic, Lattice, Tealium, Zaius
Data providers: Acxiom, Experian, Nielsen, Neustar, Towerdata
08
CUSTOMER ANALYSIS
Problem: Digital market players do not know what needs and behaviors their target audience have. User data must be
analyzed to derive insights on user behaviors, segments, correlations between different characteristics and to predict future
developments depending on user activities.
Solution: The central steps of Customer Analysis are achieved through the use of analytics software specialized in marke-
ting use cases. These software solutions come with pre-packaged APIs to CDPs and DMPs and customer-centric analyses.
Benefit: Qualitative and quantitative recommendations regarding the interaction with online customers.
Customer analytics software: Alteryx, Clari, InsightSquared, mixpanel, Zendesk Explore
CONTENT OPTIMIZATION/ONSITE OPTIMIZATION
Problem: Companies in digital markets do not have the means to turn the insights gained from the User Analysis into pro-
ductive usage. Therefore they must apply dynamic personalization of website content and presentation forms, automated
communication and dynamic pricing.
Solution: A user-centric design is characterized by comprehensibility, conciseness and intuitiveness. Therefore, providers
must derive concrete configurations for layout, formatting and structure of the website or software from user needs and
behaviors.
Benefit: Companies can deploy highly complex rule-systems in easy-to-use software and addressing all their users.
CMS software: Bloomreach, Crownpeak, Episerver, Magnolia
Personalization software: econda, Dynamic Yield, Segment, trbo, woopra
09
b) Design-driven segment
USABILITY DESIGN
Problem: Providers of digital products and services do not know how a first-time user of their service wants to be presen-
ted with content in order to have a pleasant experience. Therefore, digital players must adapt the frontend interface and
page structure of their solution based on what personal goal a user wants to achieve on the website or with the software.
Solution: A user-centric design is characterized by comprehensibility, conciseness and intuitiveness. Therefore, providers
must derive concrete configurations for layout, formatting and structure of the website or software from user needs and
behaviors.
Benefit: Besides a satisfied user, companies enforcing optimized usability design benefit from side-effects such as less sup-
port inquiries and more seamless operation of the product or service.
Usability design agencies: Bakken & Bæck, Clay, Fjord, Nielesen Norman Group, Work & Co
BRANDING
Problem: Companies on digital markets investing in a positive user experience must ensure that users recognize by whom
the service is presented.
Solution: An association between provided experience and providing company is achieved by means of content branding
that creates higher trustworthiness, recognizability and differentiation from competitors.
Benefit: Branding activities not only drive brand awareness, and trough this better reach and credibility. In a long term
context an increased brand value also leads to recurring revenues.
Branding agencies: BLVR, C42D, La Visual, Motto, niftic agency
10AESTHETIC DESIGN
Problem: When creating a above average user experience, digital players have to ensure which emotions they want to
evoke at the user as more subtle and subconscious factors play a huge role in overall user experience. The wanted emotions
must be reflected in graphic design and aesthetic design components.
Solution: Companies are able to attain the wanted emotions and associations on a website, web shop or software th-
rough certain color palets, pictures, logos and graphics, as well as some layout options.
Benefit: These measures can deliver high impact on user experience with relatively low technical effort, also supplemen-
ting branding intentions.
Aesthetic design agencies: Charly Smith Design, The Chase, Chermayeff & Geismar & Haviv, Landor, Pentragram
In comparison to the data-driven segment of UX, where However, the full potential of design-driven user experien-
the three subsegments Customer Data, Customer Ana- ce management unfolds when engaging simultaneously
lysis, and Content Optimization depict a logical chain of in the three subsegments Usability Design, Branding, and
customer data-driven experience customization, the de- Aesthetic Design.
sign-driven aspects of UX are more independent from one
another.
11USER EXPERIENCE
3. Mergers & Acquisitions in the UX market
In our consulting practice and in the observation of the M&A market,
4 central transaction rationales stand out with regularity:
COMPETITIVE PERSONNEL ACQUISITION FINANCIAL
MOTIVES MOTIVES OF ASSETS, TECH- MOTIVES
NOLOGY, AND IP
Increase in market share, access to Recruitment of employees in tight Improvement of own positioning and ROI-driven investments in
new markets, acquisition of customer personnel markets service scope through purchase of attractive markets and
bases, elimination of competitors (Acqui-hiring) assets, technology, and IP companies
In the remainder of this paper, we examine M&A rationales in the UX market against the background of this classification.
3.1 Data-driven segment
The advent of the Experience Economy has necessitated a who can thus expand their service portfolio and meet
new awareness of user needs and behaviors on the part increasing user demands.1 With consumers being floo-
of digital enterprises. In this age of big data, companies ded with web content every day, interaction with a di-
with large customer bases can only provide this service by gital enterprise is often dependent on the relevance of
using modern technologies for customer analysis. the specific content for the specific user. Content perso-
A study by McKinsey from 2016 found that many com- nalization therefore plays a big role in digital marketing.
panies do not yet recognize this need for analysis as a A 2018 consumer study from Adobe shows, that many
central tool for commercial success. At the same time, consumers are annoyed by not relevant – so not persona-
the consulting firm was able to show that online players lized – or too personalized content.2
who already use extensive user analysis perform signifi- The use of content optimization software can help digital
cantly better than comparable competitors. This in return companies hit the sweet spot of personalization. As with
makes providers of customer analysis software popular consumer analysis solutions, this drives attractivity of op-
acquisition targets for technology giants and consulting timization solutions as acquisition targets for technology
companies, and service providers.
1) Source: McKinsey; 2) Source: Adobe Systems
13Percentage of companies above Percentage of companies above avg.
avg. competition by use of competition by use of
customer analysis1 in % customer analysis2 in %
Percentage of companies above avg. com- Percentage of companies above avg. com-
petition by use of customer analysis1 in % petition by use of customer analysis2 in %
No extensive use of customer analytics Annoying aspects of content from brands
Extensive use of customer analytics
Profit Too wordy/poorly written
28 44
54
Sales Poorly designed
28 37
51
Sales growth Isn’t relevant to me/my situation
25 36
53
ROI Too personalized where it is creepy
26 31
56
Seen before/old
30
Not optimized for device
30
No image/video
17
1) Source: McKinsey; 2) Source: Adobe Systems
14DEAL LOGIC 1:
Large Data Providers acquire technology vendors to improve data services
and expand service portfolio
Data Providers, such as Nielsen and Neustar, are the back- For Data Providers, the acquisition of user analysis and
bone of data-driven user experience management, as content optimization software therefore represent an at-
they provide crucial consumer data that cannot – with a tractive business development case for two reasons: One
reasonable effort – be collected by the professionals using the one hand additional analytics capabilities might im-
them. Since these Data Providers have build up huge prove the companies’ data offering through better mar-
amounts of data as well as deep understanding of this ket insight. On the other hand, Data Providers can use the
data and its use cases, these companies also have star- analytics capabilities to sell completely new services and
ted offering consulting and services related to their data solutions to their customers.
treasure.
Target Target Description Acquirer Announced Deal logic
Date
Sellpoints Provider of headless CMS with content Syndigo 08/18
personalization and testing features.
AcquireWeb DMP with customer analysis features. Claritas 01/18
Data
Reach Analytics User analysis software for customer 01/18
segmentation and profiling. Decisions
Software for strategic marketing decision
Pointlogic Nielsen 03/16
making.
User analysis software with analytics
MarketShare features in the area of marketing mix Neustar 11/15
modelling, and multi-touch attribution.
15The provider of information regarding product content, nutrition data and digital media as well as CMS software, Syndigo,
acquired SellPoints, provider of a CMS solution for retailers with Content Personalization features, in August 2019. The
transaction improves Syndigo’s market positioning through being able to provider better data products as well as additional
services in the field of Content Personalization on their own CMS platform.1
In January 2019, AcquireWeb, provider of a graph data base featuring consumer data and customer analysis features for
the purpose of new customer acquisition, was purchased by Claritas, one of the leading vendors of consumer data and re-
search services. The transaction extends the buyers data asset and service portfolio by a technological software dimension.
This allows Claritas to improve data delivery to their customers. Together with a past acquisition of Claritas, Barometric, the
enterprise is able to offer data services in identification, delivery and optimization.2
1) Source: PR Newswire; 2) GlobeNewswire
16Data Decisions, one of the global leading data and research providers, bought Predictive Marketing startup Reach Ana-
lytics, in January 2019. Through Reach Analytic’s technology, Data Decision meets growing customer demands for “Smart
Data”, user-related data enriched with data from real-time predictive analytics models. The technology beats traditional
predictive methods which are too slow for on-demand personalization, and machine learning tools which do not offer
explanation of their results and therefore no recommendations for personalization measures.1
Vendor of marketing analytics software, Pointlogic, was acquired by Nielsen, one of the worlds largest providers of data
assets and adjacent services, in March 2016. The targets technology for strategic marketing decision making positions the
company as an integral partner in media planning services for media agencies. The acquisition improves Nielsen’s ability
to build consulting services on the enterprises Total Audience data product.2
Global real-time marketing data provider, Neustar, in November 2015 acquired MarketShare, a vendor of software for
marketing analytics and multi-touch attribution. The addition of multi-touch attribution and marketing mix modelling ca-
pabilities of MarketShare help Neustar in delivering insights on comprehensive marketing planning and sales attribution.
Neustar both expands its service portfolio and improves data provided by the company to its customers.3
1) Source: PR Newswire; 2) Source: Nielsen; 3) Source: Pressebox
17DEAL LOGIC 2:
Technology giants acquire DMP, Users Analysis and Content Optimization software
providers to build holistic cloud marketing platforms
As global technology giants, such as SAP, Oracle or Ad- In the context of a growing digitization of marketing and
obe, provide solutions for all kinds of verticals, business sales processes, global software enterprises have shown
lines and geographies, these enterprises are highly depen- a increasing activities in building holistic cloud marketing
dent on remaining their positioning as industry-leading platforms. This covers marketing performance systems, as
holistic software providers. To meet the related customer well as customer experience management systems. Since,
demands, technology giants constantly need to cover active acquisition strategies are a preferred way for these
white spots in their software portfolio and provide soft- providers to keep up with technological innovation speed
ware ecosystems comprising every relevant software fea- and customer demands.
ture.
Target Target Description Acquirer Announced Deal logic
Date
Real-time user analysis platform for
Jetlore PayPal 05/18
predictive customer behavior analytics.
Content optimization and marketing
CallidusCloud SAP 01/18
performance assessment software.
Provider of DMP software and customer
BlueKai Oracle 02/14
data.
Software provider for online marketing
Omniture Adobe Systems 09/09
and web analytics.
18Jetlore, vendor of an AI-based software for users analysis and personalized user experience, was acquired by mobile pay-
ment technology company, PayPal, in May 2018. Jetlore’s solution will be embedded in PayPal’s Marketing Solution suite,
strengthening marketing analytics and testing capabilities of PayPal. Especially the Content Personalization features of
Jetlore presented a technology portfolio extension for PayPal.1
In January 2018, the Europe’s largest software vendor, SAP, bought marketing suite provider, CallidusCloud, for 2.4 bn USD
in a public takeover. The CallidusCloud solution represented a holistic marketing software ecosystem offering tools for HR
Management, Sales, Lead-to-Money, Marketing as well as User Experience. The two companies had been software partners
for several years. The target’s software has been integrated into SAP’s Hybris solution.2
In February 2014, DMP software vendor BlueKai was acquired by technology giant Oracle for an estimated price of 400 mio
USD. Through the acquisition and subsequent integration of the technology into Oracle’s previous targets, Responsys and
Eloqua, the enterprise was able to enrich the Oracle Marketing Cloud with marketing automation features.3
1) Source: VentureBeat; 2) Source: ZDNet; 3) Source: ZDNet
19Over ten years ago, in September 2009, Adobe, at that time vendor of boxed software such as Adobe Photohhop, Flash
or Dreamweaver, announced its acquisition of Omniture, a web analytics company. Omniture itself had pursued an active
M&A strategy the past month acquiring testing software vendor Offermatica and real-time behavioral targeting provider
Touch Clarity. At the time, Adobe’s move seemed irrational – today it is a blueprint for building a marketing cloud.
Through the transaction, Adobe was able to extend their creative software offering by an analytics dimension. This in
return allowed Adobe software users to rise from pure digital asset creators to web content creators, gaining crucial,
quantitative customer feedback on their digital content. That way, online players for the first time were able to optimize
creative content according to user experience measures. Today, Adobe features the end-to-end Adobe Experience Cloud
offering tools for advertising, analytics, marketing, and commerce.1
1) Source: TechCrunch, ZDNet
20DEAL LOGIC 3:
Consolidation in data-driven User Experience software sector
Some transactions can also be observed within the da- On the other hand, the interesting case of the former
ta-driven User Experience Software segment. On the company Omniture, now part of the Adobe Analytics
one hand, acquisitions in the area of data storage are Cloud, shows that acquisitions can also make economic
noticeable, i.e. in Customer Data Platforms and also in sense for reasons of portfolio expansion in the user expe-
CMS systems for data management website data. These rience segment.
transactions rather represent consolidation cases than as-
set purchase.
Target Target Description Acquirer Announced Deal logic
Date
Conversion Logic Marketing Performance and Attribution VideoAmp 03/20
technology provider
Provider of CDP with
Lattice Engines Dun & Bradstreet 01/19
user analysis features.
Provider of headless CMS with content 10/18
Tribliod Liferay
optimization features.
Software for testing and performance Adobe Systems
Offermatica 09/07
optimization of website content. (once Omniture)
User analysis software featuring pre- Adobe Systems
Touch Clarity dictive modeling and data mining for 02/07
(once Omniture)
real-time behavioral targeting.
21VideoAmp, provider of brand marketing and chross-channel attribution technology for video advertising formats, acquired
ConversionLogic, a marketing performance and attribution software provider. The target will be integrated as a key asset in
the privacy compliant attribution suite of VideoAmp. The acquisition strengthens the buyer’s capabilities in the machine-le-
arning attribution area, but also benefits VideoAmp’s dashboarding functionalities.1
Lattice Engines, provider of CDP and User Analysis software powered by machine learning technology, was acquired by
Dun & Bradstreet, vendor of marketing databases and analytics solutions, in January 2019. The deal positions the buyer
as a leader in integrated data and analytics solutions for B2B marketing and sales professionals. Especially Lattice Engines’
Ai-based analytics capabilities complement Dun & Bradstreet’s CDP solution, bringing benefit to both the targets and the
buyers customer bases.2
The Account-Based Marketing cloud provider, Triblio, was acquired by Liferay, a vendor of software for digital experience
creation on web, mobile and connected devices, in October 2018. Liferay, that is specialized in solutions in the context of
customer lifecycle and customer journey management, through the new technology is able to further address Content Per-
sonalization matters and therefore offer a more holistic product portfolio. But the target Triblio also benefits from the new
owner in form of further market reach and investment capital.3
As pioneer in UX-related M&A transactions, user analysis software vendor Omniture acquired both Touch Clarity and la-
ter Offermatica in 2007. Offermatica had sold software for testing and performance optimization on websites to analyze
customer behavioral change after website changes and adapt accordingly. Touch Clarity through its tools offered automated
behavioral targeting solutions. By means of the acquisitions, Omniture was the first technology company to offer end-to-end
customer analysis solutions to its customers. The deals also boasted massive cross-selling potential.4
1) Source: BusinessWire; 2) Source: Dun & Bradstreet; 3) Source: PR Newswire; 4) Source: VentureBeat, DM News
22DEAL LOGIC 4:
Consultancies as well as service providers acquire technology providers to improve
software competencies and expand service portfolio
Consulting companies as well as service providers face In order to meet this demand, service providers and
an increasing demand for user experience services from consultants often have to expand their own service port-
their customers. These customers often run websites or folio with UX competencies. This expansion of expertise
webshops themselves and are looking for professional is also achieved through acquisitions of technology provi-
partners to optimize these marketing channels for a good ders, as the acquirers need to strengthen their own tech-
user experience. nological capabilities.
Target Target Description Acquirer Announced Deal logic
Date
Performance Marketing and Advertising Dentsu Aegis
Merkle 04/20
software provider. Network
Tech-focused marketing solution provider
Merger: in user experience optimization, content Merger:
iCiDigital personalization, as well as marketing Blue Acorn iCi 04/19
automation.
User analysis software with machine
DxContinuum ServiceNow 01/17
learning features for sales teams.
Data provider; Automated dynamic
Wiser Solutions Quad Analytix 09/16
Pricing software.
Knetik End-to-end software platform for user
Cima Group 05/16
analysis and content personalization.
23Provider of of performance marketing and advertising software, Merkle, was acquired by global marketing agency net-
work, Dentsu Aegis Network. The acquisition rose DAN‘s stake in Merkle by another third providing the buyer 100%
ownership in the target. Dentsu had purchased a first mayority stake in 2016. Dentsu Group CEO, Yamamoto, stated
regarding the deal: „Merkle represents the highest growth area of the overall business“ and that the target was a key
element to Dentsu‘s overall strategic growth plan. Yamamoto also emphasized how the transaction provided clarity to
employees, clients, and stakeholders in uncertain times.1
In April 2019, E-commerce agency Blue Acorn and tech-focused marketing agency iCiDIGITAL merged to become the
end-to-end digital marketing consulting and technology provider Blue Acorn iCi. Before the transaction, Blue Acorn had
been specialized in providing digital commerce UX design and strategy services, iCiDIGITAL had been developing data-dri-
ven marketing solutions. With the transaction, both companies were able to combine their services into a holistic agency
offering data-driven and design-driven marketing solutions and consulting2
The IT management and services company ServiceNow bought DxContinuum, a developer of machine learning and
predictive analytics solutions software for sales teams, in January 2017. The acquisitions is targeted to strengthen Ser-
viceNow’s capabilities in the area of IoT sales automation. Achieving this would make the buyer one of the forefront pro-
viders of intelligent automation solutions in sales processes that would typically handled manually, such as device service
requests etc.3
1) Source: Media Post; 2) Source: iCiDIGITAL, PR Newswire
24Quad Analytix, vendor of a marketing analytics platform for pricing, promotional analysis and online-store intelligence,
acquired Wiser, provider of a machine learning solution for dynamic pricing and retail analytics, in September 2016. The
acquisition improved the buyers technology with advanced analytics capabilities. One year later, the acquirer launched the
end-to-end retail analytics platform Wiser Solutions. The new solution is positioned as a one-stop-shop for high-quality
data, analytics and workflow automation.1
Knetik, a Platform as a Service provider empowering personalization, engagement and monetization in digital experien-
ces, was acquired by global telecommunications and digital services enterprise Cima Group in May 2016. The target was
integrated with an existing portfolio company of the acquirer, Auris, a PaaS for operation and business support systems,
to support Cima Group’s visionary program Cima 2.0 focusing the company on USP-centered services, such as contextual
analytics and reporting.2
1) Source: Digital Commerce 360, Wiser Solutions ; 2) Source: Business Wire
25DEAL LOGIC 5:
Strategic investors entering User Analysis and Content Personalization
In addition to buyers from adjacent verticals of the respec- With McDonald‘s, however, a strategic buyer has entered
tive UX software segments or from the consulting indus- the content optimization market in 2019, whose inten-
try, we also see increasing interest in acquisitions by stra- tions with the software are not immediately obvious. The
tegic investors: In the case of online retailers like Zalando, fast-food group has stated that it intends to use the tech-
such technology acquisitions are even understandable as nology of the target, Dynamic Yield, to address customers
exclusive technological advantages correspond to a con- in Drive-In processes. However, immediate increases in sa-
crete competitive advantage. les figures are unlikely to outweigh the purchase price of
USD 300 million.
Target Target Description Acquirer Announced Deal logic
Date
User analysis and content optimization
software for segmentation, personalizati-
Dynamic Yield on & targeting, recommendations, tests & McDonald‘s 02/19
optimization, and real-time
communication.
Smart audience platform that offers
nugg.ad multi-channel audience targeting based
Zalando 12/15
on various data and smart data manage-
ment.
26In February 2019, global the fast food chain McDonald’s announced its acquisition of Dynamic Yield, the vendor of a
software solution for dynamic user segmentation and content optimization. The buyer said it would use the targets
technology to create personalized drive-through menus tailored in real time based on user data, enriched with additional
information such as weather, restaurant traffic or trending menu items. McDonald’s had started a digitization offensive
regarding the restaurant ordering process a few years ago – the recent transaction can be seen as the next step of the
digitization of the enterprises business model. The acquirer stated, Dynamic Yield will continue to operate as a separate
entity, which sustains our assessment, that digitization potentials for McDonald’s do not outweigh the hefty purchase
price of 300 Mio. USD. Since, the acquisition might also follow traditional financial rationales for the buyer, as the User
Experience Analytics market is growing strongly.1
The online fashion retailer Zalando acquired German Predicitve Behavioral Targeting solution provider Nugg.ad in Decem-
ber 2015. Nugg.ad’s software perfectly complements Zalando’s core business model with content personalization and
user analytics capabilities. In tangible terms, Zalando wanted to utilize the technology to monetize website traffic through
offering personalized advertising options to fashion brands, selling through the Zalando platform. The target had former-
ly been a portfolio company of Deutsche Post which had changed their business development strategy.2
1) Source: TechCrunch, Dynamic Yield, 2) Source: Horizont
27DEAL LOGIC 6:
Financial investors entering User Analysis and Content Personalization space
The UX market offers high expected future growth that is driven by both increasing consumer demand for positive ex-
periences and technological advancements. The data-driven segment of UX additionally boasts highly scalable business
models. Altogether, this creates an attractive environment for both venture capital and private equity investors.
Target Target Description Acquirer Announced Deal logic
Date
Automated user research tool for SaaS.
Qualaroo Qualaroo is a user research tool for UX Scaleworks 01/16
Designers working in SaaS space.
In January 2016, venture equity investor Scaleworks, acquired a majority stake in Qualaroo, a software tool targeted at
UX designers of SaaS products. With the Qualaroo solution, designers are able to analyze user behavior based on diffe-
rent design and usability configurations. The company was a perfect match for Scaleworks – a financial investor that has
coined the investment class of venture equity. Following the investment thesis, Scaleworks invests in controlling stakes of
B2B SaaS companies that have outgrown startup status and operates them for high growth. Therefore, the investor will
most likely not pursue a buy-and-build strategy with Qualaroo, investing in additional companies in the UX testing mar-
ket, but will grow the company on its own. This however underlines the financial attractivity of UX software companies.2
1) Source: Scaleworks
283.2 Design driven segment
Acquisitions of UX agencies, which provide services in the areas of usability design, branding, as well as design & aesthetics,
are primarily driven by personnel motives: The expertise in these topics is ultimately anchored in the minds of agency em-
ployees; at the same time, the personnel market for UX designers is extremely thin. Most UX designers have acquired their
skills on their own - training these roles in the organization takes too much time for many companies.
Percentage of UX designers having completed certain UX programs1 in %
Self-taught 65 %
4-year university degree 32 %
Master’s degree 21 %
Online certification 17 %
Bootcamp (e.g General Assembly) 11 %
Doctorate Degree or higher 3%
Other 10 %
In these cases, a company purchase is a suitable means of personnel generation (Acqui-hiring). At the same time, the
buyers can extend not only their capacities in existing competency fields, but also attain new expertise areas.
1) Source: UXPin
29DEAL LOGIC 7:
Software vendors and providers of individual development services acquire UX de-
sign agencies to improve their own software frontends
Companies that offer standard software or individual development services have to deal with increasing user requirements
regarding usability, intuitiveness and aesthetics of software. The new designers gained through a UX acquisition act as in-
house consultants and counterparts to the development teams of the software and development companies. Additionally,
the different way of thinking present in a design agency as a means to freshen up a firm’s own entrenched structures, is
another welcome side-effect of the acquisition of a design agency as a technologycentered company.
Target Target Description Acquirer Announced Deal logic
Date
Assign Technology and Design service company. GlobalLogic 10/19
Digital strategy, design and development
Skookum GlobalLogic 09/19
firm.
Lollypop Terralogic 07/19
UX UI Design Studio.
Solutions
Comrade is a full-service digital agency
Comrade focused on creating brand and digital CI&T 08/17
experiences people love.
30GlobalLogic, a developer and engineer of digital products, acquired Skookum, a digital strategy and design agency, in
September and Assign, a technology and design service company, in October 2019. The acquirer, through both transac-
tions, was able to strengthen its own, already existing UX competencies. The acquisitions also complemented GlobalLogic’s
holistic digital transformation services through additional expertise in technology services at Assign and in digital strategy
services at Skookum. Assigns addition to the group functioned as an entry to the Swedish digitalization services market.
Even though, the targets only brought a combined additional workforce of 110 employees, GlobalLogic has been able to
further emphasize its UX and Design offering since.1
Terralogic, a US-based a provider of professional IT consulting as well as software engineering and development services,
acquired Lollypop, an Indian UI & UX design agency, in July 2019. Before the transactions, the acquirer offered end-to-end
software product engineering and development services – but with a low emphasize on UX aspects in product design. The
purchase of the target therefore complemented Terralogic’s field of expertise by these UX and design competencies. Terra-
logic CEO Bhardwaj commented “Technology is amazing and it changes the way we work or perceive the world, but it‘s
only with Design that we can truly make technology accessible and usable”. At the same time, an acquisition by a global
service provider made sense to the founders of Lollypop, as the target hence was able to reach new customer groups and
grow as a company. As the acquired UX service firm added 150 designers to Terralogics existing workforce of over 1000
engineers, the acquisition had a significant impact on Terralogics business, bringing Design services in the forefront of the
company’s offering.2
One of the US’ strongest growing global digital solution providers, CI&T, acquired Comrade, a agency for digital strategy
and user experience design, in August 2017. The buyer had achieved organic year-over-year growth rates of 30% wor-
ldwide providing large-scale, high quality digital transformation projects with fast time-to-deployment through design
thinking and lean methodologies. Through the addition of Comrade, a San Francisco Bay area based digital strategy and
user experience agency, the group’s service offering was complemented both by the strategy consulting as well as the
human-centered design expertise of the target. Besides the contentual fit, Bruno Guicardi, CI&T co-founder and president,
highlighted Comrade’s pragmatic way of working, deep ties with Silicon Valley, as well as the targets “expertise in working
with the U.S. financial services sector” as “exciting opportunities for future growth.”3
1) Source: GlobalLogic, Assign, Skookum; 2) Source: Terralogic, Lollypop; 3) Source: CI&T, Comradeagency, PR Newswire
31DEAL LOGIC 8:
IT and management consultancies acquire UX design agencies to complement their
consulting portfolio
Traditional management consultancies as well as IT The transaction rationales show, that in pure service pro-
consultancies see an increasing customer demand for im- vider acquisitions, illustrating and taking advantage of
provement of the UX of their own websites, e-commerce synergy effects is mandatory to achieve a successful deal.
systems, or software solutions. The acquisition of UX de- Even though management and IT consultancies must
sign agencies by these consulting firms therefore follows adapt their service offering to the growing customer de-
the business case of higher direct customer sales through mand in the area of UX, possible acquisition targets must
UX projects through a more holistic service offering. fit a prevalent M&A strategy – for example in terms of
complementing an existing service portfolio or a geogra-
phical expansion plan.
Target Target Description Acquirer Announced Deal logic
Date
Invention & Business Strategy, User Expe-
West Monroe 10/19
GoKart Labs rience & Design, Web & Mobile Software
Partners
Development, and Digital Marketing.
Essential Design Essential Design operates as an innovati- PA Consulting
on strategy and product design business.
10/18
Group
Idean is a global design firm dedicated
to building digital products that define Capgemini
Idean 02/17
brands and designing services for the
human experience.
32In October 2019, management and technology consulting firm West Monroe Partners from Chicago acquired GoKart
Labs, a Minneapolis-based digital business and experience service company. The acquisition strongly boosted the buyers
capabilities in digital product and experience design, perfectly complementing West Monroe Partner’s blend of business
and technology expertise. GoKart Labs also brings new methodological competencies in the field of design thinking to
the group that had already expanded to Minneaplois by means of an acquisition of an medtech M&A consultancy in
2013.1
A very similar transaction rationale underlay the acquisition of Essential Design, a Boston-based provider of innovation
strategy and user-centric product design services, by innovation and technology consultancy PA Consulting from London
in October 2018. Through the addition of Essential Design to the PA Consulting group, the UK company was able to open
up another innovation centre in the USA bolstering PA’s innovation efforts in the Virgin Hyperloop One transportation
project of Elon Musk.2
A transaction that was mainly driven by adapting to a change in customer demand is Capgemini’s acquisition of Idean
in February 2017. Paul Hermelin, Chariman and CEO of Capgemini commented on the deal: „Customer demand is shif-
ting; service providers who bring digital design, creativity, and agility to redefine the customer experience are developing
a strategic dialog with their clients, driving uniquely differentiated outcomes, and gaining market share as true digital
partners. The acquisition of Idean is part of the Group‘s growth strategy focused on innovation and digital particularly in
North America. […] Idean‘s Scandinavian design ethos and Silicon Valley mindset are a perfect fit to further enhance Cap-
gemini‘s progressive digital customer experience offerings.“ The Finnish target company, founded in 1999, offers services
in digital user-centric strategy and user experience design. Idean has already been working for several large European and
US start-ups from the Silicon Valley and boasts access to these disruptive and potentially huge customers.3
1) Source: consulting.us, bizjournals.com, West Monroe Partners; 2) Source: PA Consulting, Essential Design; 3) Source: consultancy.eu, GlobeNewswire
33DEAL LOGIC 9:
Media agencies acquire UX design agencies to deepen their digital design expertise
and expand their own teams
One of the most widespread transaction rationales fol- As many marketing agencies in the digital age already of-
lows a consolidation logic where the acquisition of a di- fer web or software related as well as creative services to
rect competitor serves as access to new customers and their customers, the specific offering of UX competencies
market share in an already addressed market, access to in many cases equates to efforts in becoming a holistic
new markets through expansion or access to additional digital marketing service provider. Growing the team can
personnel capacity. These rationales can also be observed be a sufficient reason for an M&A transaction even for
in the UX design market. agencies already offering UX design services.
Target Target Description Acquirer Announced Deal logic
Date
MCD is an agency focused on the digital M&C Saatchi 03/16
MCD Partners
user experience.
Thin Martian Digital Interface Agency. Codegent 01/13
34In March 2016, LIDA, M&C Saatchi’s customer relationship management and direct marketing agency from London acqui-
red MCD Partners, a digital user experience agency from the US. By means of the transaction, LIDA’s team was scaled up
from 220 digital marketing experts in London and Sydney by 120 designers and developers from New York and Chicago.
Whereas the acquisition target’s service focus did not correspond to LIDA’s portfolio without exception, there were undeni-
able overlaps in the space of digital marketing services. The deal offered both benefits of an increase in scarce UX personnel
resources as well as access to the US market.1
The front end design and creative UX agency Thin Martian, based in London, was acquired by Codegent, a incubator for
digital product brands in SaaS & Mobile also from London, in January 2013. By the time, the acquisition represented a
portfolio extension for the buyer that was then able to offer holistic services in design, UX and technical development. Thin
Martian’s expertise field of designing and developing leading digital interfaces complemented the offering of all SaaS and
mobile startups in Codegent’s portfolio. Besides that, the two young companies were able to lever synergy effects from
sharing a joint office and gaining a critical size needed to execute larger projects.
In 2017, Thin Martian was sold to the newly founded Konekt Group, a service and consulting agency network consisting of
five companies specialized in the digitalization of commercial processes. In this agency group offering diverse services regar-
ding digital products, lead generation & sales campaigns, marketing & awareness campaigns, as well as data-led strategic
improvements, Thin Martian takes an indispensable role with its UX design expertise: On the one hand as a service in itself
– on the other the other hand as an interconnection between creative marketing agency services, backend development
processes and (user) data analytics.2
1) Source: MCD Partners, GlobeNewswire; 2) Source: Codegent, Thin Martian
35USER EXPERIENCE
PROVENTIS PARTNERS – TMT PRACTICE GROUP
Our experienced integrated professional team benefits from an excessive network at national and global level and
has a strong track record in the TMT sector
Proventis TMT Sectorheads
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Partner, Munich Partner, Munich
Proventis TMT Team
Florian Liepert Winnie-Marie Fuchs Maximilian Gluchowski
Director, Munich Associate, Munich Associate, Munich
37Four offices based in German-speaking Europe represent
Proventis Partners. From Hamburg, Munich, Cologne, to
Zurich, a team of 30 professionals supervises national and
international projects. The clients profit from regional
roots and our partners’ international network.
The local presence provides for short distances and a
deep understanding of the needs particularly of mid-size
customers. The location at important hubs broadens the
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know: the M&A business is a global business. A happy
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