A decade or so ago, the idea of a publishing company buying a company that puts ad agencies in front of prospective clients and which initiates new business pitches would have been unthinkable.
But the world – and the world of marketing communications in particular – has moved on enormously in the past 10 years, and the notion of such a buyout not only doesn’t seem bizarre, it actually makes sense.
Those were the thoughts that struck me when I heard the news on Wednesday that Centaur Media had bought Oystercatchers, one of the UK’s best-known intermediaries, for more than £3m.
Let’s look at the buyer and the bought.
First, the purchaser, Centaur. It was set up back in the late 1970s by the combative Graham Sherren as a business to business publisher. Sherren had previously been at publishing giant Morgan Grampian, where he was a passionate – and successful – advocate for controlled free circulation B2B titles. These CC mags, as they were known, were sent free of charge to qualifying, named individuals. This meant that advertisers could be confident that their ad messages were reaching the intended audience with very little wastage; and therefore they were very attractive to advertisers, especially jobs advertisers.
As a result, Centaur grew rapidly and its stable of titles – many of them market leaders – included the Lawyer, the Engineer, Employee Benefits, Design Week, Money Marketing and (most relevant here) Marketing Week, Creative Review and the late, lamented New Media Age. Sherren’s company was also a pioneer in the field of 'magazines as brands' and many of the titles encompassed events and conferences as well as print.
It is often said that in the period 1975 – 2000, Sherren’s outfit launched more magazines than just about anyone else; I can’t verify this, but see no reason to disbelieve it – and the PE houses which owned the company after Sherren sold it were happy for he (as chairman) and his lieutenants to get on with it.
By 2004, when Centaur was floated, it had 24 magazines, 20 exhibitions and 100 conferences. EBITDA profits were £9.6m and profit margins averaged 14 per cent, which made a strong float value of £140m – especially as by 2010, profits had fallen to £6.6m and shares were worth just 50 per cent of their value at IPO. Sherren by this time had left his position as chairman, and in an attempt to turn things round, the company went on an acquisition spree which resulted in another profits slump.
Andria Vidler, formerly of EMI and Bauer, was brought in as CEO in 2013, and her magic touch – moving away from mags and towards events and other added-value services as well as boosting staff morale – resulted in a profit of £10m on revenues of nearly £73m in 2015. Since then, the company has further reduced its reliance on digital and print advertising and events account for almost half its revenues.
The company was diversified also with the £38m purchase in 2012 of Econsultancy, a research, data, training and educational resource aimed at the marcomms industry with more than a quarter of a million subscribers worldwide.
And so to Oystercatchers. This intermediary (an intermediary basically links a seller – ie an agency – with a buyer, usually a brand owner or advertiser), like others of its kind, helps agencies promote and make available their services. Oystercatchers, led by the personable Suki Thompson, was known for its personal touch.
It was founded by Thompson and Peter Cowie in 2008. Turnover has grown from £1.1m in the year to 31 March 2012 to £3.4m in the year to 31 March 2016. As well as acting as an intermediary, it has diversified and offers clients consultancy on marketing models, partnerships and pitches as well as training services.
Its clients include blue chips like P&G, McDonald’s, Barclays, Avis, Amazon and Camelot. It also runs regular Oystercatchers Club events in London (main picture) that see senior marketers and agency chiefs take part in panels tackling the big strategic challenges of the day.
And where is Centaur going to put its new baby? Logically enough, it will sit within the Business Information Division, alongside Marketing Week and Econsultancy.
Better still, Oystercatchers’ experienced senior management team – Thompson, Cowie, Angus Crowther, Richard Robinson and Vladimir Komanicky – will remain with the business. And Thompson will join the Centaur Executive Committee from next month.
And this is where the deal really starts to make sense. Because, just as Oystercatchers is no longer just an intermediary, Centaur is no longer merely a publisher; both parties are essentially consultancies working in marketing communications.
As Vidler said this week: “This acquisition is a win-win for our businesses. The combination will enable Centaur to become the ‘go-to’ provider for brands seeking to drive their marketing performance.”
Centaur obviously has ambitions to be a leading global consultant in the marcomms sector (and marcomms is already the biggest single unit within the business). Interestingly, Centaur has tried something similar before (in 2010), in the form of Pitch, a subscription-only website that showcased agency capabilities. The idea was to convince agencies to pay to get their credentials in front of Marketing Week’s client readership. It featured news, views and opinion and the Marketing Week Agency Reputation Survey. Ironically, Oystercatchers and other intermediaries/pitch consultancies like the AAR would have seen it as possible competition to their own services, however Pitch closed after about a year. This time round I can see Centaur having a lot more success.
One area in which the company could have a lot of success is in helping to make pitches less complicated. Some US mega-pitches can mean scores – or even, in one notorious case, hundreds of meetings – and can cost millions. Even in the UK, pitching for a decent bit of new business can take months and cost an agency hundreds of thousands of pounds.
Anything that can streamline these processes – perhaps with some of the initial heavy lifting and grunt work done online or at events – would be welcomed by all sides. And I’m sure that agencies would be willing to pay handsomely for consulting that helps them get better at pitching and winning them.
With this latest acquisition, Centaur now has three well-known and interlinked brands (Marketing Week, Econsultancy and Oystercatchers), and more importantly, a very experienced team of experts with which to become a force in marcomms consultancy.
However, it is a fairly small fish in a biggish (but getting bigger) pond, and will have to invest, and invest quickly, in order to make an impact. This means spending money on marketing the service to the right people; making full use of Thompson and Cowie’s contact books, as well as using their networking skills; joining the dots with Marketing Week’s heritage status as a “power brand” publication in its world and the data from the likes of Econsultancy; and, most importantly, working to persuade people (agencies and brand owners principally) that this is something worth them investing their time and money in too.
The stakes are high, and so are the rewards. In an increasingly interlinked world, brand owners are looking for joined-up thinking. Centaur’s deal this week shows that Vidler and co. are thinking along the right lines.
Oystercatchers’ rivals, as well as the big consulting firms, will be watching with interest. Centaur has to move quickly, in case (or before) giants such as McKinsey, EY or PwC decide to park their tanks on the lawn.
Andrew Moss is a partner at Green Square, corporate finance advisors to the media and marketing sector