The Big Question: Will You Sell Your Advertising Agency?
I Know You Want It
Most of the advertising agencies I talk with want to get bought – sooner or later. Who wouldn’t? However, most will not. There are a range of reasons. But here is the big (rather obvious) one:
Most agencies have not created enough value for a second party to want to buy them. A key question I ask agency owners is, “Would you buy your agency?” You can imagine the general answer once the CEO puts her thinking cap on.
Value is created by having one or more of the following:
- Your agency is a revenue powerhouse and is very profitable.
- Your specialty is unignorable. Example: you are a brilliant mobile marketing agency or specialize like this Boise agency.
- Your client list is spectacular.
- Your strategy and creative chops are notable and world-class.
- Your leadership is super smart.
- You are in a geography that a major agency network needs to be. This benefit has been diminished over the years but can still generate interest. How is your Saigon office doing?
OK, On To Portland
I’ll start with me. I sold my agency six years ago. I did this because I was realistic. We were not cool enough for WPP or large enough for Publicis or special enough for MDC. But, we were very attractive to another Portland agency that needed to grow faster. They bought our revenues, clients (from Nike AOR to major healthcare, to a lottery and casinos and hospitality accounts), our very sharp staff (all of them) and it was all made easy since we were in town. I also wanted to get the fuck out of the industry (I had been it for close to 30 years) and did not want to go through another reinvention so I took a reasonable offer.
Instrument Bought By MDC Partners
Here is the first paragraph of the press release.
MDC Partners announced today that it has acquired a majority partnership interest in Portland, Oregon-based digital agency Instrument. Founded in 2002, Instrument is one of the largest independent, digital brand and experience innovation companies in the U.S. The agency’s 175-person team of strategists, producers, designers, engineers and content creators helps drive businesses and engage consumers. This new partnership accelerates MDC’s growth and builds its portfolio of modern, innovative and digital-first agencies.
WPP’s POSSIBLE Acquires Digital Agency Swift
The press release…
WPP announces that its wholly-owned company, POSSIBLE, the global creative digital agency that is part of WPP Digital, has acquired The Swift Collective, Inc. (“Swift”) in the United States.
Swift’s revenues for 2014 will be over US$13 million and its clients include HTC Corporation, Starbucks, Nestle USA and REI. Based in Portland, Oregon, Swift employs over 70 people. Swift is a digital agency that specializes in creative and strategy, branded content creation and social media.
The acquisition continues WPP’s strategy of investing in fast-growing markets and sectors such as mobile and digital.
OK, What’s Up?
A few things.
- Portland is a hot “creative” geography.
- These are both VERY digital shops.
- They each have strong client lists. Google, Sonos, Levi’s.
- They have decent (higher than most independents) revenues.
- They are run by smart people.
So, you want to sell? Create value that someone else wants to buy. Start today and make creating agency value an objective. This goes beyond just adding clients. It means standing out in a sea of advertising agencies.