The first of the deals we’re going to look at this week involved the Norwich-based (what is it about Norwich at the moment? – see previous blogs) digital agency Selesti acquiring – for an undisclosed sum - the search marketing division of Online Media Group (OMG).
OMG, an international affiliate and reward marketing group (also based in Norwich!) was founded in 1999 and has successfully developed an SEO and pay-per-click (PPC) service over the last decade. However, OMG decided, due to there being “distinct differences” between search and affiliate marketing, to sell its search division to concentrate on its core affiliates business.
Selesti, by contrast, is a youngster. It only launched in 2005 but has been growing rapidly, winning 25 awards along the way with places in both The Drum’s Top 100 UK agencies and the Recommended Agency Register’s Top 100 Outside London. It offers digital strategy, ecommerce, branding and web, app and mobile development solutions. Its clients include Pets At Home, Zoopla, The Youth Hostel Association and the NHS.
From this month the senior professionals from OMG Search will be joining Selesti’s team of digital specialists to bolster the latter’s existing search services including SEO, social, PPC, Social Media alongside tracking and analytics.
Interestingly, Selesti will work closely with OMG, so the deal feels more like a merger than an outright acquisition. This means that both companies and their clients should now have access to a wider range of offerings.
For Selesti this looks like a very good deal – it can now offer a wide range of digital services all in one place, has access to some high-quality data and gains a degree of scale and reach. The agency is known to be ambitious, with aggressive growth plans and a new, spacious set of offices. Definitely an agency to watch.
One of the buyers we watch closely is WPP, which is by far the most aggressive of the big groups when it comes to acquisitions. Aside from acquiring Fortune Cookie, Sir Martin Sorrell hasn’t opened his wallet very wide since the huge – and stunning – takeover of AKQA a few months ago. However, his GroupM media agency group snapped up (subject to regulatory approval, which should be a formality) a majority stake in Hong Kong-based Netbooster Asia earlier this month.
Founded in 2007 in Manila, Netbooster is the holding company of a group of full-service digital agencies operating in Indonesia and the Philippines , offering media, production and creative services. The agency employs around 110 people and its blue-chip clients include Unilever, L’Oreal, Del Monte, Globe, BDO, Wyeth and Intel.
Netbooster will rebrand to Movent (no, we don’t know what it means either) in Manila; in Indonesia it will be consolidated into GroupM’s digital offering.
Netbooster is quite small – unaudited revenues were about $2.5m last year – but it is recognised as a player in the region – as well as the aforementioned client list, it has good local knowledge and contacts. It has gained a reputation for successfully integrating a wide range of digital expertise into a one-stop shop. Linking with mighty GroupM will give it a big competitive advantage over other similar-sized agencies in South-east Asia.
The deal is even better for the acquirer, which has always been strong in “traditional” media in the region (it has won the 4As Media Agency of the Year award four years running) but is not particularly strong in digital.
A controlling stake in Netbooster will enable it to extend its digital capabilities in Asia, and it will acquire an important pool of local knowledge and talent into the bargain. It’s the perfect combination of local expertise and global scale. It may not have made the headlines like the AKQA deal, but it’s yet another canny purchase by WPP. Indeed, WPP’s share price rose on the news.
Finally, it seems pertinent to mention an agency that was bought only five months after it was founded. Quaturo was set up in London by one Kevin Gibbons, and specialises in SEO and content marketing. Its client list includes some intriguing UK companies – Vistaprint, Audley Travel, Wonga and UCAS.
It was snapped up (for an undisclosed sum) by BlueGlass, an ambitious American digital agency based in Florida, with satellite offices in Los Angeles, New York and Australia. BlueGlass offers a range of search services; SEO, SEM, content management, and social ad management and has apparently long looked at the UK with interest. It’s not just buying Quaturo, it says, it’s setting up BlueGlass UK (with Gibbons as MD).
BlueGlass has – rightly, I think - identified an opportunity here in the UK. An October 2012 Econsultancy study revealed that a surprisingly small share of UK companies (only 38%) have any form of content marketing strategy in place, and a whopping 66% of UK companies do not have any budget allocated to content marketing at all! Additionally, more than 90% of the participants surveyed believe that content marketing will only become more important over the next 12 months.
“With 62% of UK companies missing huge marketing opportunities, demand will soon vastly outstrip supply, based on existing vendor capacity,” says BlueGlass CEO Richard Zwicky. “There is concern among companies in the UK that content marketers may be focusing on simplistic objectives rather than focusing on the bottom line. The common thinking is that content marketing is just an ‘add-on’ to SEO. However, the success BlueGlass has garnered with the strategic use of content marketing to support all online marketing channels has proved otherwise. We believe we have the right formula to tap this market opportunity.”
All of which sounds like sound thinking to me. It’ll be interesting to watch how this pans out, and whether BGUK will end up being a major player.
And how was the deal done so quickly? Apparently Gibbons met the BlueGlass management at a conference; they liked the cut of his jib, appreciated his and his team’s talents, and decided he was their man.
Which just goes to prove something we all already know. In the world of mergers and acquisitions in the marketing services space, it’s not just that the assets are the people, but the fit and chemistry between the personalities is a hugely important factor.
Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector.
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