Cheil Worldwide has taken a stake in independent advertising agency Iris, it was announced today. Mark Williams, a director at Results International which advised Cheil on the deal, gives us the inside track.
The cultures of Cheil and Iris are surprisingly similar and this is a logical east meets west partnership. Both have a reputation for innovation and creativity, producing work that is recognised and awarded globally. For example, Cheil’s virtual Tesco store in a Korean subway station captured the imagination of the marketing community and beyond.
Both businesses take enormous pride in their creative output; visitors to any Iris office or Cheil Korea HQ can see clear parallels in the way each makes its creative output the centrepiece of the agency.
But the fit goes way beyond culture and creative. Collaboration has been the signature of the deal from the word go and the skills and geographies that each brings to the party are hugely complementary, affording ongoing global growth.
Interestingly, this is the fourth significant cross border deal we have seen this year following We are Social/BlueFocus last December, DC Storm/Rakuten several months ago, and Dentsu Aegis/Fetch just over a week ago, each of them a sign that Asian parent companies are looking to diversify internationally.
And Asia is likely to figure large on the deal scene in the months ahead. Only a few days ago BlueFocus was rumoured to be making a play for Vision7, Cossette’s parent company. Very quietly in the background, Japan’s second largest network Hakuhodo DY Holdings is taking its position, developing significant momentum, guided by Michael Birkin as CEO of Kyu, the network’s operating unit set up to grow its global agency portfolio via merger and acquisitions. Then there is Dentsu Aegis which has also been an active acquirer in recent times.
Key to understanding the M&A market is the notion of the pipeline. The deals we see happening today are just the tip of the iceberg as each can typically take months to several years to complete. With this in mind, it’s easy to imagine the number of deal conversations that may well be happening right now that will change the shape of the industry in the next 12 months.
Asian networks will be interesting to watch in 2015. They represent a challenge to the status quo of the four big Western networks and are quickly building global scale and capabilities with a determination to do things differently.
Remember too that we are not just seeing an eastern appetite for moving west. Ad budgets in Asia are growing year on year and the best of the Western agency networks will want to look east for future growth and for potential partners. Seen like this, Iris’ union with Cheil makes perfect sense.
Mark Williams is a director at Results International, which acted as advisers to Cheil.