September 5, 2014

Déjà vu

Is it starting to feel like the late nineties again?  When it comes to the digital marketing sector, and web design services firms in particular, you just might think so.   The US web design services market grew 4.5% in 2013 to over $20 billion, representing one of the fastest growing industries since the recession. It is estimated that 15 million new websites are created every month, 70% of which are designed and built by a professional design company, driven in part by an abundance of new social media and mobile technology tools to reach consumers and leverage new streams of data.  The majority of marketers believe the design and maintenance of the corporate website is still the greatest contributing factor to marketing success , and therefore,  we expect to see digital design agencies benefit from as new technologies,  global connectivity and a need to have one view of the customer across all channels will fuel increasing web design budgets.

Similar to the late nineties, we are beginning to see the overlap of technology, design, system integration and consulting services create a highly complex market segment.  The web design services market itself is highly fragmented and with hundreds of small web design firms.  As you add in layers of technology complexity and a focus on improved customer experience, the sector changes radically.  Larger consulting firms are buying new technology capabilities.  Systems integrators search for design capabilities.  Ad agencies continue to buy up both technology and design.  All of this driving an robust M&A market for high quality design strategy consulting firms.