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2014: the year in digital agency acquisitions
If 2014 was a big year for investment in the South African startup space, it was an even bigger year for digital agency acquisitions. While the likes of WPP and Publicis have been a part of the country’s digital agency space for a good few years now, 2014 was particularly busy.
It wasn’t just the world’s two biggest advertising holding companies making acquisitions either. US advertising giant also got involved. Significantly, so did Deloitte as it continues to expand from one of the traditional “big four” professional services companies into a major threat in the digital agency scene.
With that in mind, here are the biggest — and most significant — agency deals Ventureburn covered in 2014.
Read more: The Memeburn guide to the SA digital agency landscape
You can’t mention the South African digital agency space without mentioning Quirk. Founded in 1999 by the energetic Rob Stokes, the company rapidly became South Africa’s premier digital agency, with offices in three of South Africa’s major cities, as well as in the UK and Kenya.
In May this year, WPP bought a controlling stake in the agency, believed to be worth between R350-million and R450-million.
Speaking to Ventureburn, Stokes insisted that he’d only agreed to the deal because the way it was structured would allow Quirk to retain the ethos and way of doing business that made it so successful in the first place.
2. WPP acquires Gloo through Ogilvy & Mather
This deal, which went through in early November, had been in the works for a fair amount of time and was kept tightly under wraps. In fact, Gloo founder Pete Case fervently denied that any deal was in the works when Ventureburn asked him about it back in June.
Read more: Gloo CEO quashes Ogilvy acquisition rumours
The deal saw Gloo’s former majority shareholder Kagiso Media sell a percentage of its stake in the digital agency, although it will remain involved to some degree.
Operationally meanwhile, Case will take up a central role in O&M SA as co-Chief Creative Officer. Other senior employees at Gloo Johannesburg will take up positions across the agency and its digital and CRM business, OgilvyOne Worldwide SA.
Subsequently, and on completion of the deal, O&M SA plans to physically absorb Gloo into its Johannesburg office and will form part of an internal technology and innovation hub to the 15 companies within the O&M SA Group.
Gloo Cape Town however, will continue to operate as an independent and separate digital specialist, with the added resources of the groups’ international innovations lab to accelerate its focus on leading-edge technology and innovation.
3. Deloitte snaps up UX agency Flow Interactive
While it certainly wasn’t anywhere near the biggest deal of the year in financial terms, Deloitte Digital’s wholesale buyout of specialist UX agenccy Flow Interactive is important because it shows how serious the professional services company is about making a mark in the space traditionally dominated by digital agencies.
If Quirk laid the foundations of the South African digital agency scene, over the past couple of years Machine has been the agency responsible for adding the subtle-but-daring finishes.
It was no surprise therefore that it was on the acquisition radar, especially given founder Adrian Hewlett’s talent for taking his businesses through successful exits.
Read more: Machine on the verge of an exit, but to whom?
While the agency is still young, having only been founded in 2012, it very quickly became one of the most successful players in the digital agency space, with a staff of more than 150 in its Johannesburg and Cape Town offices and winning a claimed 86% of its pitches.
5. Publicis’ DigitasLBi guzzles up Liquorice
Another steady player in the South African digital agency space, Liquorice was bought out by DigitasLBi in August. A digital-centric subsidiary of Publicis, DigitasLBi has 40 offices in 25 countries around the world.
It acquired Liquorice wholesale, with the deal designed to help the Cape Town-headquartered agency into Africa. No details were given on how much the deal was worth or what terms it was signed under.
6. Dentsu Aegis buys out Crimson Room Communications, will be integrated into Posterscope
It might not have as high a profile as the likes of WPP and Publicis, but Dentsu Aegis has been a significant investor in the South African digital agency space for some time now.
Its eight global network brands include Carat, Dentsu, Dentsu media, iProspect, Isobar, mcgarrybowen, Posterscope and Vizeum.
In August, it bought out experiential marketing agency Crimson Room.
Established in 2005 by Philippa Viljoen, Crimson Room Communications offers a range of experiential marketing services from strategy development and concept ideation, events management, promotions, public relations and brand activation to execution of the brand experience across a multitude of consumer touch points.
The deal saw the agency integrated into Posterscope, with the eventual aim of establishing psLIVE in South Africa.
7. Grey Group acquires majority stake in Volcano
The Grey Group’s May acquisition of Johannesburg-based agency Volcano actually represented a return to the South African market for the 93-year-old company.
The deal saw Volcano, which itself had been operating for 20 years, rebranded as Grey Africa, which will focus on developing a strong local presence in South Africa as well as lead the brand’s expansion in other key African markets.
8. Starcom MediaVest Group merges with Lighthouse Digital: now SMG Lighthouse
Another major Publicis acquisition, this was probably one of the more important but less hyped deals of 2014.
Lighthouse Digital was founded as a specialist digital media agency by Steven Waidelich and Aaron van Schaik in 2009. It claims to be the first agency in Africa to provide clients with a proprietary real-time reporting dashboard, serving as the “leader in programmatic media buying in South Africa.
Under the terms of the deal, Lighthouse Digital co-founder Aaron van Schaik was named CEO of the newly rebranded SMG Lighthouse, reporting to SMG President, Dynamic Markets, Iain Jacob.
