UPDATED 13:12 EDT / JANUARY 29 2016

NEWS

IBM gets into the digital marketing business with first agency buy

Amid rumors that it’s preparing to lay off thousands of workers from its professional services business, IBM Corp. is bolstering the struggling division with the purchase of its first digital marketing outfit. Resource/Ammirati Inc. was up until the acquisition one of the biggest independent agencies in the U.S., with more than 300 workers across three locations.

The Ohio-based firm achieved its size on the back of lucrative contracts with Apple Inc., Procter & Gamble Co., White Castle System Inc.  and many other of the world’s largest brands. About three quarters of the companies on the list are also customers of IBM, which should make the account migration process somewhat simpler that it would have been if with different agency. But the main reason why the enterprise technology giant decided on Resource/Ammirati is its expansive lineup of services.

The firm does everything from decorating corporate websites to organizing large-scale advertising campaigns across multiple channels. Its professionals can even assist retailers with packaging in order to try and make their store items more appealing. That focus aligns well with IBM’s plans for its budding product design consultancy business, which received a $100 million capital injection from chief executive Virginia Rometty about a year and a half ago to expand operations. The funds for the deal probably came from elsewhere, however, given its size.

IBM didn’t disclose any of the financial details, but according to a 2014 report from advertising trade journal AdAge.com, Resource/Ammirati generated $52 million in revenue during the prior year. That likely puts the value of the acquisition somewhere in the low nine digits, or possibly even more depending on how fast the agency has grown since then. The transaction is expected to close later this quarter.

Image via Geralt

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