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Archive for April, 2009:

Twitter RFP by Current TV

0 Comments | This entry was posted on Apr 28 2009

twitterjkretch

Our friends at Current TV, lead by the VP of Marketing Jordan Kretchmer @JKretch, have shaken up a very old legacy system by issuing an RFP for a new agency for Current TVusing Twitter and its spread throuh the twitterverse like a wildfire. I can’t decide if its made the age old pitch process of agencies, consultants, hours wasted, hours lost, huge cost, three rounds and eventually one winner into a quick 140 character smackdown or made the game a whole lot more competive, complicated, but ultimately transparent with more opportunities.   .  . maybe a little bit of both. . .

Here is the search stream: (Please note its real time) http://search.twitter.com/search?q=twitteRFP

What I find interesting about this is the following:

  • Any agency that is playing has to have a bit of knowledge of social media, and the winner will know how to leverage its tools to drive real value
  • Its highly innovative and a PR/Social Media Move in itself (how about a huge bump in SEO!)
  • Its quick and easy (well it should be) since you only have 140 characters, and therefore the multi-million dollar pitch process is turned upside down.
  • Just like Twitter Current TV delivers content in bite sizes
  • Its completely transparent
  • It requires an agency to be very creative, think outside of the box, and not go back to the old tools of TV ads (especially since Current TV is the anti-model of old TV)
  • It levels the playing field since any agency (including our friends in Alabama @redbrickagency) can get in and win the pitch
  • The agency selected has to be quick and nimble like the culture they live in.
  • The best ideas will come to life because the community will engage with them and ultimately it is self selective.

Looking forward to following this one to the end, the Twitterverse is watching!

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Advertising Industry, Social Media

Ad Guys and VC deals – Exit Strategies and the role of the holding company

0 Comments | This entry was posted on Apr 27 2009

This Blog post is very relevant based on an article by Brian Morrisey in adweek today about the dangers when Admen Play Venture Capitalists: http://www.adweek.com/aw/content_display/news/digital/e3ida99bf36787f149a545a35829f3ef2e8

Here is a flip side to that, rather than their investments in, how about the acquisitions when the firms get out?

Last week I met with a very successful VC Firm to discuss some of my forecasts in digital media, and the interesting companies I have been meeting. One of the topics we hit upon was exit strategies, and since I lead our digital efforts which include digital M&A as well as partnerships he thought that so and so company might be an interesting acquisition candidate for a holding company.

There lies the quandary.  Holding companies in the past have been making investments into technology companies, but the reality has been that it has been incredibly small, except for the most recent WPP investment into Omniture.  And yes some of these companies have gone out and made acquisitions in technology, once again WPP and 24/7, but the reality is that these acquisitions haven’t proved very successful in terms of an offering integrated into the business.  Where I think it does end up making sense is when you consider minority or strategic investments from the holding company, as in the WPP investment into Wild Tangent, or some of the IPG investments into Facebook, which gives the agency network (specifically the individual firms) access into a deeper relationship within the interworking of a potentially disintermediary or market making technology for insights, learning, and ideally competitive product offerings.
IPG just announced an incubator program for emerging technology companies specifically around one agency, we at MDC have had one in place for a little over a year.  Now unlike IPGs, MDC’s program works with the individual business to create product offerings and then scales these product offerings across the entire network of agencies.  The goal here is two fold, drive revenue and help new companies gain an understanding for the advertising world, and two provide value to MDC Partners (competitive advantage, learning, products etc.). We have also built our program to create alignment between the holding company, our firms and the emerging companies we are working with.
But back to the exit strategy of the Holding Company.  While I think Advertising Agency Holding Companies should have a backbone in their own proprietary technology, the challenges lies in its simplest in valuations.  You see technology companies typically trade at a much higher multiple  than agency services businesses, whe re agency services businesses typically trade at a lower multiple and it is primarily based on EBITDA.  Therefore it gets very difficult to justify a 30x revenue number when your existing core business is trading a much smaller multiple.  There are other considerations to take into account, but it has to do with the required investment in technology and the future value of that investment as well as the immediate impact that adding one body (or personal capital) adds to the bottom line for a services business vs a technology business.
Now don’t get me wrong, I think this is completely flawed since the future of advertising and marketing services realizes on technology, but that’s a whole other blog post.
Now I think the real key to success between the holding companies and technology is partnerships.  Where we are not going to be your best source of an exit, I will tell you this, we are huge sources of your most valuable requirement. . . revenue.

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Venture Capital