Services: Green Square

So it was interesting to see the news earlier this week that Omnicom Media Group (Omnicom’s media business unit, which includes agency brands like OMD, Novus and PHD) had bought Mobile5, the UK mobile marketing agency that counts Samsung, Canon and Trinity Mirror among its clients. Now this of course doesn’t mean that the “Publicom” merger isn’t going ahead – the acquisition of companies by both entities will carry on, albeit not on a huge scale as the merger beds in. They simply cannot discuss what they are looking at until the deal is finalised. Nobody is saying how much money changed hands in this latest deal, but it must have been a tidy sum. Although less than three years old, Mobile5 already employs over 30 people in its London offices, and has a tasty client list, as we’ve already seen. Mobile5 – set up by mobile veterans Oli Roxburgh, Steve Clarke and Guy Marks, all of whom appear to be staying – will continue to be run as a separate agency within Omnicom’s OMG network, based at the latter’s London offices. Interestingly, Mobile5 will be familiar to OMG boss Colin Gottlieb and his team – the former has already worked with the latter on a number of accounts, notably PlayStation and Waitrose. So why did he buy? I think there are two reasons. The first is that there’s a mutual synergy between acquirer and acquired. Mobile5 provides services such as mobile strategy and insight, mobile experience design, mobile content creation, mobile commerce and marketing solutions. Good, funky, creatively-led stuff – the kind of start-up DNA that big networks like OMG are always seeking to inject into themselves. But what Mobile5 doesn’t do is planning or buying: this is of course something that OMG does very well. “They are doing the stuff that’s further upstream and that’s the stuff that we’d rather have on top of our existing services,” Gottlieb said in a media statement earlier this week. It looks as if Mobile5 will now provide mobile services to its new owner’s EMEA agencies network. And the second reason? That’s more strategic and tied up with a rather different deal done by Omnicom on the other side of the Atlantic. Earlier this week the network signed a year-long contract with Instagram, the Facebook-owned photo-sharing service. How much the deal was worth isn’t clear – the amount was not officially disclosed and I’ve read figures ranging from between $40m and $100m; whatever, it’s a big deal. This is the first time that Instagram, which has 150 million active users (60 per cent of them from outside the US), has signed a deal with an ad network. In fact, it’s only been taking ads since last year. Essentially, Omnicom creative and media agencies will create “ads” (possibly in the form of sponsored photos or streamed advertising) which will be delivered to Instagram users. A high level of media placement skills – not to mention sensitivity – will be needed if Instagram users (many of who have been muttering about leaving if Facebook tries to show them ads) are to be fully engaged. I have heard that Omnicom will be putting its best teams on this – so ads will be of very high quality creatively and almost “manually” placed, by tapping into the reams of data provided by Facebook. Instagram’s tentative moves into advertising have, by all accounts, been pretty successful. But they’ve all been within the US and – given almost two-thirds of Instagram users are elsewhere – to really make the deal work on behalf of clients on a global basis, Omnicom will have to use or acquire local talent. This is where a UK-based agency like Mobile5 comes in. Also, whilst Instagram is available on the desktop, it’s primarily a mobile service (which is what prompted Facebook to pay $1bn for it back in 2012). Again, for the tie-up to work properly, Omnicom will have to ensure that it has people with experience in, and understanding of, mobile as a channel and a space. And again, this is where an agency like Mobile5 excels. I can see Omnicom making similar acquisitions in other territories in the coming weeks and months as it seeks to ensure its media agencies rule the mobile space. Unless, of course, another network has other ideas…

As we’ve said before, Aegis has never been short of ambition and energy, but following its just-short-of-$5bn buyout by the Japanese giant Dentsu earlier this spring, it now has even deeper resources to fulfil those ambitions. It’s ambitious. It wants to be the world’s biggest media specialist (in the digital space especially) – to harmonise nicely with those (to expand aggressively outside its Japanese heartland) of its new owner. No less than three Aegis deals have popped onto our M&A radar over the past week or so – the purchase of Dutch social media agency Social Embassy; a buyout of Romanian agency Kinecto; and the acquisition of Belgian experiential and events specialist NewWorld. All three deals are interesting in their own individual ways and are a fascinating indicator of the mindset of Aegis post-Dentsu; and all are worth looking at in more detail. Social Embassy, based in Amsterdam, is a specialist social media agency whose focus is on community management and consulting. Established in 2008, it has built a fast-growing business, with a diverse client base including Unilever, Coca-Cola and KPN. Details of how much Aegis paid for Social Embassy have not been revealed, but I suspect what caught the acquirer’s eye was the fact that the high-flying Dutchmen have developed monitoring software to analyse the online “landscape” around a brand. The resulting “Social Media Brand Map” model classifies brands based on the share of online conversations and sentiment of posts, compared with competing brands. Based on the results of its research, Social Embassy helps clients develop social media strategies and creative concepts for content and activation, to then measure and interpret the results. The company also conducts its own Social Media Monitor research study to uncover how top 100 brands make use of it. Following the acquisition, Social Embassy will work closely with the Netherlands-based social media team of Aegis’ digital media unit, Isobar. It’s a great deal for everyone concerned: Social Embassy founder Steven Jongeneel, gets the backing to expand his unique offer into new markets (and probably gets a potentially very lucrative payday further down the line); while Social Embassy’s expertise and client base strengthens Isobar’s market position and will generate the benefits of greater scale in the Netherlands. And of course, Aegis gets some very interesting software. Unlike the Netherlands, Romania is seen as a bit of a backwater in the marketing services world. But with its membership of the EU, the former communist state is looking like an attractive prospect for ambitious pioneers – especially those with an eye on the potentially enormous Turkish market. Which is why Aegis has just bought Kinecto, part of Tempo Creative Group (a kind of Bucharest-based mini-WPP and one of the top-tier digital agencies in Romania), from its shareholders, Radu Ionescu and Dragos Grigoriu, for a total consideration of up to €5m, based on future business performance. Established in 2003 by former journalist Ionescu, (who will be staying on as managing director), Kinecto was one of the first digital agencies in Romania and grew rapidly following its 2008 acquisition, by Tempo. Kinecto had a turnover of just under €1m in 2012, up an impressive 32% on the year before. The company will be folded into Isobar and re-branded as Kinecto Isobar. Again, Aegis seems to have got itself a great deal – an experienced full service digital marketing team with connections and knowledge in the Romanian and Bulgarian markets, who can help Aegis/Isobar’s global clients expand into the region – at minimal financial risk. Finally, we return to the Benelux region, and Aegis’ acquisition of the NewWorld group, based in Mechelen (one of Belgium’s most important Dutch-speaking municipalities) and one of the leading brand activation and events specialists in the Benelux region. Headed by founder Wim Voss and working in the three Benelux countries of Belgium, the Netherlands and Luxembourg, NewWorld specialises in experiential marketing, live communication and field marketing, with some great clients – including Miele, Mazda, Lyreco, Metaxa, L’Oreal and Ralph Lauren. The business will remain NewWorld, but will become part of the psLIVE experiential network with immediate effect. Wim Voss, founder of the NewWorld group, remains as managing director of the business and will become part of the management team of Aegis Media Belgium. The acquisition (full details of which have not been revealed) is consistent with Aegis’ recent strategy of acquiring businesses which enhance the breadth of products and services within its networks – so in this case they’re buying the talent of Voss and his team, good local connections, plus an agency with skills in all the right areas: brand activation, design and development, events, logistics, digital print, creative, mobile activation and even tailor-made construction (NewWorld has its own in-house team of specialist carpenters!). None of these acquisitions have made the headlines like last week’s Yahoo! buyout of Tumblr. But this spurt of activity by Aegis should be reported – it’s important because it shows the company’s energy and ambition, and gives a clue as to its wider strategic thinking. And just as importantly, this little shopping spree sends out a clear message to competitors that Aegis is no longer “just” a collection of media agencies but a global digital and marketing services group. Sometimes the small buyouts matter as much as the big ones

They have a point – up to a point. At Green Square, we’re constantly looking at financials, drilling down and analysing, but even to M&A advisers like us – who love detail – once we have got the overview of the picture the figures provide it is hard to get really excited by the umpteenth balance sheet iteration!However, used properly, and to some of the industry’s most astute buyers – Sir Martin Sorrell for one – data is really rather sexy; something to definitely get excited about. As brands attempt to make their marketing messages more targeted, more relevant, in order to cut through the noise that fills our lives, data – or rather, the ability to interpret data and generate insights for creative and planners – becomes ever more important. Which is why we’ve seen a lot of boutique data outfits snapped up by the big boys over the past few months. This week is no different, although the acquirer is nowhere near WPP-sized. WANdisco (Wide Area Network Distributed Computing, apparently) is listed on the London Stock Exchange and has offices in both Silicon Valley and the Don Valley (i.e., Sheffield). It’s essentially a company that allows software developers to work on projects collaboratively and simultaneously, wherever they are in the world. It’s the kind of company that doesn’t look particularly exciting at first glance but which investors flock to – indeed, when WANdisco floated on the LSE six months ago, the IPO was massively oversubscribed. Although not a marketing services company in the strict sense, WANdisco and outfits like it will be very much part of the future. It obviously has ambitions, because it has just acquired a small but important US data analytics company called AltoStor. AltoStor is a pioneer in what’s called “big data” – datasets so large and so complex that standard relational databases just can’t handle them. We’re talking about tens or hundreds of terabytes (millions of gigabytes) and upward. Examples here in the UK might include bank, credit card, NHS or DVLC databases or familiar brands such as Amazon, Tesco, Facebook, eBay and British Airways – and it’s not inconceivable that FMCG giants such as Proctor & Gamble, or automotive manufacturers like Toyota and Ford, are “big data players” as well. AltoStor was a pioneer in the use of the Apache Hadoop big data platform, which is becoming a bit of an industry standard. So it’s easy to see why it was such an attractive acquisition for WANdisco, who can now offer clients some serious big data collaborative software tools. These could have far-reaching implications for the management of large CRM databases and the like, especially as brands start moving to the cloud (Amazon and Apple are two obvious examples). WANdisco said immediately after the acquisition that it hopes to have its first big data products out next year. It may be a couple of years before we start seeing the effect these tools have on digital marketing. But there will be an effect. Still with digital, it’s interesting to note that one of the fastest-growing marcomms specialisms, healthcare, has been a little slow on the digital uptake – there are relatively few digital pharma agencies in the UK. This is slightly odd because tablets and smartphones have revolutionised the working practices of physicians and pharmacists – you’re just as (if not more) likely to see a doctor clutching an iPad as a clipboard these days. So it was no surprise to see the Creston group paying a rumoured £3m for a majority 75% stake in the highly-rated digital healthcare agency DJM Digital Solutions. DJM will be incorporated into Creston’s Health division, alongside Red Door, Pan and Rock Medical Communications. The new parent has the option to buy out the remaining 25% from 2018. Creston’s “new boy” employs 26 people at its Richmond offices and specialises in fields such as iPad e-detailing (a way for pharma sales forces to interact with physicians, cut costs and get their drugs prescribed, usually through an online portal like doctors.net.uk. The great advantage with e-detailing is that it allows busy doctors to “talk” to pharma reps at a time that suits them); augmented reality; and standard website build and SEO. What’s especially interesting about this acquisition – apart from the fact that there’s one less fish in the small digi-pharma pond of course – is that there’s the opportunity to apply DJM’s specialisms – e-detailing looks very promising – to consumer and B2B marketing (Creston owns the likes of TMW, Columbus and Nelson Bostock). Imagine being able to talk to, or get info from, a virtual sales rep at your convenience and without the hassle of a hard sell – that’d be something a lot of consumers would probably be keen on – I certainly would be interested – and which might make for some very effective communications at some point in the not-too-distant future.