As John Townshend opens the doors to his new agency for the first time this week, he and his partners will join a long queue of start-ups which, in most cases, have seen their founders put their reputations – not to mention their homes and marriages – on the line for the chance to go it alone.
Many will no doubt be asking why he is bothering. After all, having come from landed gentry – his direct ancestor was ‘Turnip Townshend’ and John’s elder brother recently inherited the baronial pile of Raynham Hall – you might think he would have better things to do than toil away trying to come up with new and more ingenious ways to flog stuff.
You may also wonder why anyone would leave the safe confines of a top role at a highly successful agency for the uncertainty of running their own company, in an environment where half of all start-ups fail within the first five years. But you would be ignoring one of the key drivers of launching a business – to prove that you can do it for yourself.
Chris Ward has already gone through the process once when he launched Personal and, it seems, he can’t get enough as he has now joined forces with former Proximity chief Amanda Phillips to enter the fray once more, this time with An Abundance.
As Townshend said on departing Rapier, where he had been for nearly 16 years: “I have wanted to create a new agency for a while. With the world changing, it feels like the perfect time to start an agency built around the way clients need to work.”
If they need any encouragement, ‘Lord T’ and his co-founders of Now, Mark Lund and Kate Waters, only need to look back to the past two months, during which time both Chemistry Communications and Kitcatt Nohr Alexander Shaw have sealed highly lucrative buyout deals with Publicis. And, although the timing of the deals was probably a coincidence, the reasons behind them were not, according to Results International managing partner Keith Hunt.
He said: “The big networks have come out of the recession with a lot of money, and, combined with low interest rates, they are looking to invest heavily in acquiring established businesses.”
He should know. The company, a leading corporate finance and strategy advisor to the global marcoms industry, has witnessed the busiest start of the year since 2007. It has closed £100m worth of deals in the first two months alone, including Latitude/Callcredit, BGB/Four Communications, DLKW/Lowe and Total Healthcare Group to United BioSource Group (UBC), while it also acted as advisor on the Publicis/Chemistry deal.
Hunt said: “There is plenty of demand but a limited number of independent players to be sold and deals will probably be done at lightning speed.”
And it is not just the likes of Martin Sorrell and Maurice Levy who are getting their chequebooks out. These days, there is a growing pile of private equity money, both in the UK and overseas, as well as a raft of companies looking to get in to the sector for the first time.
In the US, for instance, publisher Meredith is on a major acquisition trail, as is Cosmopolitan and Esquire publisher Hearst, which last summer paid $325m for digital marketing agency iCrossing. Here in the UK, printer St Ives recently bought data business Occam, while Callcredit has splashed the cash for digital agency Latitude.
But most of these deals have one thing in common; the desire to acquire digital and direct expertise. Pure play digital agencies are no longer in their sights, as tasks such as Web design and build have become much more commoditised. You can get a website built anywhere in the world at a fraction of the price it would cost in London or New York, as experts in Eastern Europe and the Far East grab market-share.
Hunt said: “Being a specialist digital agency is no longer attractive. Buyers are looking for businesses with a legacy of digital, direct marketing and creativity, combined with strong management teams, which can be moved to other parts of the business.”
With LIDA co-founder Lisa Thomas now chief executive of parent M&C Saatchi, and Partners Andrews Aldridge co-founders Phil Andrews and Steve Aldridge taking up top roles with Engine Group, there is a precedent for such moves.
But according to Hunt, the real land grab is going on in search marketing. He said: “Social media and search are the most sought-after expertise. Search was worth more than £3bn last year and although it is seen as the less sexy end of the market, companies know it is crucial.”
It is no coincidence that old-style direct marketing agencies have embraced digital techniques. Digital is a natural progression for a discipline founded on measurement and ROI; few have yet to get their heads around search marketing though.
If Hunt is right – and, being at the sharp end of buyout deals, few would question his judgement – there won’t be many agencies shunning this new discipline. After all, anything that increases the chances of adding a few more zeros onto that much-coveted buyout cheque is not to be sniffed at.
Charlie McKelvey is publishing editor of DecisionMarketing
Related stories:
Townshend reveals start-up ‘Now’
Ward and Phillips launch start-up
Kitcatt Nohr grabs Publicis cash
Publicis finally buys Chemistry
Major groups in agency ‘land grab’
Callcredit buys digital agency
Good luck John – best thing you ever did was to get out of Rapier!