Digital web

Acquisitions are rife in digital media at the moment, and the big networks are constantly changing as valuations go through the roof. Mike Exon disentangles the intricate relationships in this arena by taking a look at who owns whom

Demand for all things digital has gone stratospheric again. So, while the skies are blue and we’re basking in the warm waters of digital fortune 2.0, here’s a look at what’s what in the digital ownership stakes. Hopefully, the facts won’t have changed too much by the time we hit the streets.

Classifying digital groups is becoming harder. Even if we agree on working definitions of the term ‘digital media group’, it’s no longer as simple as counting up the number of groups within a given network.

Now that digital work is so pervasive across the creative disciplines, it can be unhelpful and often inappropriate to single out digital on its own. For exactly this reason, the networks are offering digital via just about all their agency and consultancy offers now. To underline the fact, we are seeing the emergence of local digital groupings within the big networks, which blend together clutches of agencies individually best-known for advertising, design, strategy, interactive or direct marketing work. These are often co-located and emblazoned with the digital banner.

Acquisitions have been rife. Large and small networks can’t seem to buy enough digital media specialists at the moment. In May, Design Week reported that valuations of digital groups were reaching their highest level since the dotcom bubble, with some groups being offered as much as 12 times pre-tax profits. The last few months have borne this out.

Many independent digital design groups like Lateral are openly courting buyers, while others are being non-committal about their future but open to discussions with digitally acquisitive networks, such as Loewy, building their own digital base.

The market for digital players has quickly divided into digital specialists – which have always existed – and the generalist multidisciplinary groups, which, more often than not, are the big new arrivals on the scene.

According to AAR head of digital Juliet Blackburn, the specialists are often thought of as being the ones that are looking to push boundaries, use new technologies and create different ways of consuming information, while the generalists are the ones rebuilding broader communications offers.

‘The generalists in the ad community set up in the late 1990s and then downsized after the dotcom downturn. Many of their digital arms were folded into direct marketing shops, but these are taking on a whole new lease of life,’ says Blackburn.

‘Both types of group have their particular challenge – the digital specialists need the top table relationships, while the big agencies with the relationships need the expertise of the specialists,’ she adds.

‘There is a lot of new venture-capital funding for digital initiatives, but agencies have jobs to fill and there are lots of vacancies for the right people,’ she says.


The Networks
OMNICOM

•Proximity (BBDO Worldwide)

•Craik Jones Digital (BBDO Worldwide)

•Tribal (DDB Worldwide)

•Pauffley (DDB Worldwide)

•Agency.com (TBWA Worldwide)

•WWAVRC.digital (WWAV Rapp Collins)

•Agency Republic (Zulu Network)

•IPSH (Zulu Network)

•Weapon 7 (Zulu Network)

Omnicom’s digital groups break down into its various sub-networks (indicated in brackets), which make up the US-owned conglomerate. Like the other major networks, Omnicom has begun to create interesting digital groupings across disciplines like Zulu, its London network, which consists of the mobile marketing shop IPSH, Weapon 7, the digital interactive television consultancy which joined in December 2006, digital advertising and media group Agency Republic, plus direct marketing agency Claydon Heeley.

WPP

•Digit (JWT)

•24/7 Real Media

•Saint (Rainey Kelly Campbell Roalfe/Young & Rubicam)

•HTW

•Ogilvy Interactive

•VCCP Digital (Chime)

•Joshua G2

•GT – Good Technology (VML)

•XM London

•141

•Syzygy (25 per cent owned by WPP)


JWT’s relationship with Digit, announced in July, is not surprising given the alliance already formed between the two since WPP acquired a stake in Digit in August 2004. The deal is symptomatic of just how valuable well-known digital brands like Digit have become to big ad agencies that are watching TV spin into the futurescape of interactive. WPP owns 51 per cent of Digit, though this deal won’t see any merging of teams on the ground. Digit remains in Shoreditch and JWT in Knightsbridge.  Elsewhere inside WPP, interesting things are happening at Saint – the digital arm of Rainey Kelly Campbell Roalfe/Young & Rubicam – launched by David Gamble and Simon Labbett in May. An auspicious start saw the group bag the Virgin Atlantic Airways account from Glue in June. Following the spring merger of Wunderman Interactive with direct marketing agency Harrison Trout Wunderman, more cross-discipline initiatives with a digital bent are on the cards. RKCR/Y&R directors James Murphy, David Golding and Ben Priest quit the agency to form their own group, which is due to start trading early next year. In July, WPP also added digital marketing group 24/7 Real Media to its digital cohort.


LBI INTERNATIONAL (LBICON.COM)


 •Framfab

•Icon UK

•MetaDesign Berlin LBI was formed in July 2006 by the merger of Wheel parent group LB Icon and Framfab. Framfab had already acquired Oyster Partners in May 2005 for an initial consideration of £12m.


INTERPUBLIC GROUP


•R/GA (Draft FCB)

•MRM Worldwide


R/GA is quickly gathering momentum in the UK, though has yet to reach anything like its scale in the US, where it employs more than 500 staff.


PUBLICIS GROUPE


•Saatchi & Saatchi Interactive (Saatchi & Saatchi)

•Arc Interactive

•Digitas

•Fallon Interactive


Publicis Groupe acquired interactive and direct marketing giant Digitas in January for $1.3bn (£637m). Digitas employs more than 2000 staff and filed a turnover of $390m(£196m) in 2006 alone. Not known are the digital implications of creating FSS, the recently announced merger of Fallon and Saatchi & Saatchi.


AEGIS


•De-construct


Glue London


Aegis added Glue London to Isobar, its digital portfolio, in August 2005 in a deal worth £14.7m. The group had previously acquired De-construct in a deal worth up to £4.8m in January the same year.


DIGITAL MARKETING GROUP


•Inbox Digital

•Cheeze

•Graphico New Media

•Hyperlaunch New Media

•Alphanumeric


DMG, the digital direct marketing group set up by Ben Langdon, former chairman of EuroRSCG UK, acquired digital direct agency Cheeze in January 2007 for £9.5m. On 2 July, it picked up creative digital group Graphico in a deal worth up to £8.6m and digital creative marketing group Hyperlaunch in a move worth up to £3.5m. The DMG strategy is to buy into on-line marketing, off-line direct marketing and database marketing.


COSSETTE COMMUNICATIONS


•Dare Digital


Cossette acquired a 65 per cent share of London interactive group Dare Digital in a six-year deal in June. Dare filed a turnover of £9.8m for its 2007 fiscal year. It employs 130 staff. Included in its stake, Canada-based Cossette Communications acquired the 30 per cent share of Dare Digital previously owned by ad agency BBH.


HAVAS

•EuroRSCG 4D Digital


Havas’ main digital interest was born out of EHS Brann Digital.


MEDIA SQUARE


•CMW Interactive


•Twentysix


Twentysix was formed from a sum of parts, which included such old design world names as Arnold Interactive, Zinc, AMX and Incepta Online. The group employs 100 people in London and its creative director is Mathew Maxwell.


MOTHER


Mother owns a 51 per cent stake in Poke


ENGINE


•Altogether


CRESTON

•Digital TMW

•DLKW, Dialogue


CELLO


•Digital People


Creston and Cello have not diversified into creative services per se, though they are included here since their direct and integrated marketing offers do encompass digital. Cello’s Digital People focuses on on-line research.








 

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