On Sunday 28th July the structure of the

marcoms world changed forever. The

cynics were quick to emerge with a

million and one reasons why the deal

was a bad thing. For a while it seemed

as if Messrs Levy and Wren were alone

in extolling the benefits of the new

Publicis Omnicom Group (POG).

Now that the shock has subsided, what does a

cool-headed review of this audacious transaction

reveal?

The trumpeted $500m annual cost savings is a big

number. However there’s something a bit suspect in

the conveniently round number that smacks of

approximation. Has the deal been properly thought

through? It’s hard to say. But then again, the cost

savings and synergies were never the overriding

reason for doing a deal of this kind.

There’s likely to be a bigger reason at play and one

that very few people are talking about. That is the

rapidly changing face of marcoms and the growing

influence of technology. The likes of Publicis and

Omnicom see squaring up to the media behemoths,

Google and Facebook as a key priority. The two

platforms are now firmly at the centre of the

marcoms industry and increasingly sucking up huge

www.resultsig.com ONE

Continued on page two

Contents:

POGs might fly .................................1 & 2

What’s driving current M&A? .........2 & 3

Master Class No 1: Asia Pacific ......4 & 5

Amaze interview ......................................6

Next generation eCommerce .................7

Building value ..........................................8

Succession planning ...............................9

Is there an aim to AIM?..........................10

Our recent transactions .........................11

The Rainbow Trust .................................11

The team ...............................................12

POGs might fly

Bulletin

Issue 61

3rd Quarter

The leading advisor to companies seeking

to build and realise value in the global

marketing communications, technology

and healthcare industries.

number of marcoms dollars from the budgets

agency networks have previously had more or less

to themselves.

The agency world needs to deal with this to find new

ways of both outwitting and collaborating with these

new giants as well as new ways of delivering brilliant

campaigns through the platforms and thereby

preserving marketing dollars for themselves. In the

face of such challenges clearly size is key and the

marriage of Publicis and Omnicom provides the

necessary scale. Technology delivers the Holy Grail

that is ROI and now, perhaps for the first time ever,

Wren and Levy’s combined networks will mean the

marcoms industry has a solid riposte to Lord

Leverhulme’s observation that “Half the money I

spend on advertising is wasted, and the problem is I

do not know which half.”

And what of the naysayers who predict trouble

ahead? As Barack Obama said, hope is not a

strategy. Wren and Levy will be working on much

more than hope to make the deal work and you can

bet your life that once this thing gets on the rails and

is rolling there will be no stopping its momentum as

well as its impact on the broader industry. A mould-

breaking deal of this kind makes the unthinkable

thinkable and there will be many independent

agency and network CEOs who will be reflecting on

alliances and mergers in new and creative ways.

The markets have a sense of this and already the

share prices of Havas and IPG have jumped up

although those of Publicis and Omnicom have

barely moved.

We are likely to see the war for talent heat up as a

result of this deal. The one place you wouldn’t want

to be right now is bang in the middle of senior

management at either network. There will be

massive uncertainty for months if not years to come

TWO www.resultsig.com

Continued from page one

POGs might fly

and a major lack of clarity around roles going

forward. We are likely to see quality people spinning

out and forming new groups as well as moving on

to competitors.

The client conflict issue however has probably been

overplayed. Our industry has had to deal with this

for generations and has, as a result, developed

pretty watertight strategies. It’s highly unlikely that

major clients are suddenly going to abandon ship.

There are relationships in place with people they

really rate and who do good work. More to the point

clients may well see the deal as an opportunity to

push down rates. When millions of dollars of cost

savings are being talked about who wouldn’t want a

share of that! Most clients will probably adopt a ‘wait

and see’ stance.

If you would like to discuss this article, please

contact Keith Hunt at keithhunt@resultsig.com

What’s driving current M&A?

H1 2013 highlights:

1. Volume and value of deals hit record

levels in H1

2. Wide range of buyers

3. Chinese buyers make their mark

4. Digital attracts most deals - mobile

the strongest sub-sector

In H1 2013, we tracked 470 M&A deals globally (228

in Q1 and 242 in Q2) across the marcoms, adtech

and related technology industries. At the current run

rate we will undoubtedly see another strong year

and be easily on course to beat the 652 deals

completed in 2012.

Total disclosed deal value to date is USD $12.2bn

with a very strong showing in Q2 representing the

lion’s share with USD $10bn. The 10 largest deals

by value happened in Q2, with June the most active

month, both in terms of deal volume and value. But

who’s doing the biggest deals, who’s doing the most

and who are the most interesting buyers in the

sector?

Mega deals

So where did we see the biggest deals? Adtech

leads the way on size with average transaction value

at USD $1bn. But the news that got everyone talking

was Salesforce.com’s acquisition of ExactTarget, a

provider of marketing automation software, for a cool

USD $2.5bn.

The deal means we’ll probably see other leading

software vendors such as Oracle, IBM, Adobe and

Microsoft buying assets to bulk up their marketing

technology offers, indicative of the boom in cloud-

based marketing software.

Other major news in this space in H1 2013 include

Google’s USD $1.3bn acquisition of Waze Mobile, a

social mobile application that enables drivers to use

real-time road intelligence, and Yahoo’s USD $1.1bn

acquisition of Tumblr, the micro-blogging social

network. Until its headline-grabbing acquisition of

ExactTarget, Salesforce.com’s largest and most

recent acquisition in the space was Buddy Media for

USD $689m in 2012.

Notable deals and buyers

Management consultants entered the fray big time in

early May when Accenture made a significant

statement of intent about expanding its digital and

marketing capabilities with the acquisition of Fjord, a

global service design consultancy. If that wasn’t

enough to raise eyebrows, in the same month

Accenture bought Acquity Group, the second-largest

independent digital marketing company in the United

States, for USD $317m and won a BMW pitch to act

as the lead consultancy in managing its digital

marketing efforts. We can expect to see more of the

same from these global consulting brands.

Another new left field entrant was BlueFocus, a

leading Chinese PR firm, who made their mark in

April. Their first acquisition, Tibet Shannan East Bojie

Advertisement Co., a Chinese ad agency in China,

for £167m, while large, could easily have slipped

under the radar. But it was BlueFocus’ audacious

acquisition of a 19.8% stake in Huntsworth for

£36.5m that took many commentators by surprise

and truly put them on the map. The deal, which has

the potential to transform the fortunes of Huntsworth,

could signal a new order in the global PR industry.

A quick bit of digging revealed that in the past

BlueFocus had been a potential acquisition target for

Huntsworth as part of their overseas ambitions. The

irony is apparent for all to see.

We believe the Chinese will continue to make their

mark and that these deals may be just the tip of the

iceberg. There is a sense that they have a longer

erica

AfricaSouth

America

UK

4

Middle East

7

Western Europe

65

57

79Eastern Europe

8

www.resultsig.com THREE

term mindset than some UK and US acquirers and

are keen to build long term relationships and

commitments as part of an ambition to build a

serious world-class network.

Staying with the Chinese, Alibaba, the Chinese B2B

eMarketplace, also made two noteworthy

investments to strengthen existing operations in

China. The first was the purchase of an 18% stake

in Sina Weibo, a leading social network in China for

USD $586m and the second a 28% stake in

AutoNavi Holdings, a provider of digital map content

and navigation and location-based solutions, for

USD $294m.

Most active buyers

WPP continues to be the most prolific buyer with 21

deals, driven by its twin focus of strengthening its

digital capabilities and growth in the emerging

markets of South America and Asia-Pacific. In South

America, it acquired a 20% share of Globant, a

Buenos Aires-based technology services business,

for £43m. In China, TNS/Kantar acquired Sinotrust,

a provider of market research, from Experian plc. In

the UK WPP acquired Salmon, a leading

eCommerce digital agency, one of only a few deals it

has completed in the UK in recent times.

Interestingly, WPP’s new venture arm, WPP Venture –

led by Tom Bedecarré, former CEO and the current

Chairman of AKQA - made two significant investments:

Fullscreen, which offers innovative technology and

premium services to content creators and the world's

leading brands; and Muzy, an early-stage micro-

blogging service focused on mobile content creation.

This is further evidence of the lab-style approach to

innovation that many of the more traditional players are

building in an effort to future proof their businesses and

offer unique value to clients.

Dentsu ranks as the second most active, following

its acquisition of Aegis with 12 deals, followed by

Yahoo with 8 and IPG with 6.

Yet if you look beyond these top 4 serial acquirers

there is a vast range of buyers. 3 of these did 5

deals each, 2 did 4 deals, 5 did 3 deals and 30

buyers did just 2 deals each. That leaves 325 with

just 1 deal each: 40 of these were private equity

backed and 9 were management buy-outs without

third-party funding. 50 were in the adtech space and

33 in the software sector. It’s a clear lesson that

when looking to sell a business it’s important to cast

the net widely and globally. And while Results has

only recently starting breaking deals down in this

way, we suspect the buyer landscape has probably

always been pretty fragmented.

Sectors

Mobile was the most active sector for acquisitions of

targets. Driven by lots of what is referred to as

'acqui-hires’, in other words companies that are

bought for their people. Yahoo, Facebook and

Google have been very active in the US buying

businesses characterised by tech engineers with

specialist mobile skills.

Geography

The largest number of deals are still done in North

America with 101 in Q1 and 118 in Q2, way ahead

H1 2013 Global M&A DealsDeal Statistics

geographical split

monthly4

top 10 most active sectors

deal type

Private Equity backed deals47

Cross border deals

143

by disclosed value

US$$12.2 bn

$

volume of deals

470Mar 13Feb 13

Jan 13

796584

North America

AfricaSouthAmerica

UK

219

9 4

Middle East

7

Western Europe

65

APAC

57

Canada

2279 Eastern Europe

8

most active buyers

WPP

Dentsu AegisYahoo

IPG

GfK

Facebook

Omnicom

Salesforce.comTwitter Adobe

21

128

6

5

5

5

4 4 3

$2.2bnQ1

17Q1

72Q1

228Q1

1118645

Jun 13May 13

Apr 13

242Q2

Mobile - 52 deals

Big Data & Analytics - 37 deals

Public Relations - 34 deals

Website Design & Build - 29 deals

Social Media / Social CRM - 28 deals

Search - 25 deals

Advertising Technology - 23 deals

eCommerce - 21 deals

Events & Experiential - 17 deals

Research - 14 deals

30Q2

$10bnQ2

71Q2

of 2012 which registered a total of 261 deals. The

UK is still strong; Q2 with 32 deals was a little

lower than Q1 with 47 but slightly ahead of 2012,

which registered 144 deals for the whole year.

Western Europe experienced its strongest quarter

in Q2 with 38 deals and was ahead of Q1 when 27

deals were done. Based on the current run rate,

2013 looks set to outperform 2012, which

registered 82 deals for the whole year.

Private Equity

In the first half of the year we have seen 47 private

equity backed deals with 17 in Q1 and 30 in Q2. At

the current run rate, this may be down on 2012,

which recorded 107 deals.

The largest of these deals so far this year is

Onex Corp’s Investor buy-out of Nielsen

Expositions; the US-based operator of B2B trade

shows, from Nielsen Holdings for $950m. With

stronger market conditions and strategic buyers

with an appetite to expand their market share,

private equity has been busy doing the reverse

and focusing on exiting their portfolio. CMBOR

(Centre for Management Buyout Research)

recently reported that exits out-number buyouts

by 41% thanks to a new listings deluge. In the

UK private equity market the most notable exit

was Isis Equity Partners’ sale of LBM Direct

Marketing to Stream Global Services Inc. for

£29m, representing a 9 times return on their

investment.

If you would like to discuss this article further please

contact Afsor Miah at amiah@resultsig.com

FOUR www.resultsig.com

It would have been impossible not to

notice the huge changes that have

occurred throughout Asia Pacific over

the past 20 years, and the increasing

impact and influence of the region on

the rest of the world. The geopolitical

importance of Asia is growing. There is

an increasing economic power shift

from the West to the East. The

significance and the many

consequences of this shift are highly

complex raising questions about the

future interdependency of the West

and East.

Changes are accelerating as half the world’s

population join the middle class, developing an ever

increasing appetite for consumer and branded

goods. The two central socio-economic drivers are

the largest urban migration in history, coupled with

declining dependency rates; simultaneous labor

force growth and rapidly declining birth rates. The

wider global economy is now being increasingly

driven by the region, led by China, which is already

the second largest economy in the world and is on

course to be the largest by 2020 – in only seven

years time. Most interesting is that never before in

history has the largest economy been a developing

one rather than a developed one, is not western,

and is the country with the largest population.

But any review of Asia Pacific must be far more

than China’s incredible growth story, which often

over-shadows the other changes rapidly taking

place - the Asia Development Bank predicts that the

region will account for over half of global output by

the middle of this century. McKinsey noted that

whilst the vibrancy of emerging-market growth will

not be the only major disruption reshaping the

global economy in the next ten years, it may prove

to be the most profound. This decade will mark the

tipping point in a fundamental long-term economic

rebalancing that will likely leave traditional Western

economies with a lower share of global GDP in

2050 than they had in 1700.

The scale of the region and the increasing global

dependence on key markets, coupled with many

more prosperous consumers who are digitally

connected, is resulting in significantly increasing

brand communication budgets and, in turn, is

fuelling a major increase in the marcoms sector.

This is all leading to significant opportunities for

International buyers and leading quality, well-

focused independent firms.

Asia Pacific is a huge and diverse area. The flight

time from Delhi to Manila is 8 hours, Sydney to

Tokyo 11.75 hours (the same as London to

Bangkok) and it is diverse in terms of culture,

ethnicity, religion, economic development,

governance and communication landscapes. In

order to make this more manageable, we divide the

region into three groupings:

North Asia:

With all the focus on China, it

is sometimes forgotten that

other areas of North Asia,

including Japan and South

Korea, are also very important

to the global economy with

their global brands that are often manufactured

locally in the US and Europe.

In recent years, Japan has been a hot bed for

mobile innovation, which is fuelling a more rapid rise

in eCommerce. Rakuten, one of the largest

eCommerce companies has been growing fast

through overseas M&A activity including; Play.com,

But.com, Kobo and Pinterest.

The Hermit Kingdom, as pre-modern Korea was

called, is certainly no hermit any more. Although

totally devastated in the Korean War, South Korea

has grown to be the world’s 15th largest economy,

with astute government planning encouraging the

growth of leading companies in each sector. Once

only dominant in their home market, these firms are

increasingly powerful on the global stage, with

Samsung now the leading mobile device

manufacturer in the world and Hyundai/Kia looking

increasingly strong in the automobile sector.

South Korea also now has the best digital

ecosystem in the world and is facilitating multiplayer

online role-playing game (MMORPG) innovations,

creating new human-to-human relationships. Their

digital ecosystem provides a window to the future

for the rest of the world!

In China, whilst growth is dropping below the

10%+ level, it still has the potential to grow

faster domestically going west within its own

borders. We see Blue Focus, China’s leading

marketing communications group, flexing its

muscles with the acquisition of almost 20% of

Huntsworth earlier this year. Growth of North

Asian companies overseas is an increasing trend

following Dentsu’s acquisition of Aegis and

Korea’s, Innocean stating that Europe is the next

geographic focus.

Master Class Series No1: Asia Pacific

Country Mobile Population % of 3G/4G % of Sources Lastsubscriptions in millions population subscriptions population Subs; 3G subs updatein millions Source: in millions

World Bank

World 6,385m 6,973.7m 98.0% 2,096m 30.1% ITU Feb 13Informa WCIS Dec 12

1. China 1,155.3m 1,344.1m 85.9% 293.0m 21.8% China MobileChina Unicom Apr 13China Telecom

2. India Active: 699m 1,241m 73.1% 70.6m 6% TRAI Sept 12Total: 906.6m Informa WCIS Dec 12

3. USA 321.7m 311.6m 103.3% 256.0m 81% CTAI Jun 12Informa WCIS Dec 12

4. Indonesia 260m 242.3m 107.3% 47.6m 19% BuddeCom May 12Informa WCIS Dec 12

5. Brazil 259.3m 196.7m 131.8% 65.5m 33.3% Anatel/Teleco Oct 12Anatel/Teleco

6. Russia 227.1m 141.9m 160% 27.0m 19% WirelessIntelligence Jun 12Informa WCIS Dec 12

7. Japan 128.4m 127.8m 100.5% 104.4m 81.7% TCA Oct 12Mobile Internet TCASubs

8. Pakistan 120.5m 176.7m 68.6% N/A N/A Anatel/Teleco Oct 12Anatel/Teleco

9. Germany 112.7m 81.7m 137.9% 53.2m 65% Bundesnetzagentur Q1 13Informa WCIS Dec 12

10. Nigeria Active: 106.9m 162.5m 65.8% 10.5m 6% NCC Sept 12Total: 143m Informa WCIS Dec 12

The 100 million club: The top 10 mobile markets by no. of subscriptions

Note: Informa 3G stats are forecasted estimates for Dec 12. Data compiled by mobiThinking

“As can be imagined, with the rapiddevelopment of the region, one ofthe biggest issues is talent –retention and recruitment. M&A hasbeen used by some as a source ofentrepreneurial spirit to refresh andact as a game changer.

A good example of this is themerger between McCann Australiaand SMART, an Australian creativeagency which was the catalyst for atransformation in McCann's creativeprowess. With their Dumb Ways toDie campaign, they not only tookCannes by storm but it is now acampaign from Asia Pacific that isknown in every corner of the world!Results International is proud tohave advised McCann on thistransaction, leading to awardwinning work which has also beenmost effective in reducing accidentsfor the client, Metro Trains inMelbourne.”

China already has the second largest population of

e-shoppers in the world (150 million) growing at

30% Y0Y with leading platforms all being domestic.

It is becoming the largest Smartphone market in the

world (250 million devices) as mobile is used far

more than PCs to connect to the Internet.

South Asia:

South Asia is often referred to

as the Indian subcontinent.

The word ‘subcontinent’

provides a clue as to the size

(almost 1.8 billion people) and

variety of this region - India is by far the major

economy and market. But whether it is India,

Pakistan, Bangladesh or Sri Lanka, democracy, civil

and commercial law-based societies and market-

based economies have taken root though with

different levels of development. Recognising the

tremendous potential of this region as a whole, it

has set up the South Asian Association for Regional

Cooperation (SAARC). SAARC is dedicated to

economic, technological, social, and cultural

development emphasising collective self-reliance.

Once the pan-SAARC economic region becomes a

reality, it will offer one of the world’s largest

consumer markets and a commensurate marcoms

industry.

Although India’s GDP growth rate has reduced to

around 6% from the highs of 9 – 10% of a few

years ago, it is now the 9th largest economy in the

world and is expected to equal the size of the US

economy by 2050.

Mass media still accounts for 90%+ of the marcoms

industry share but most exciting is the fast growth of

digital and exponential indicating the advertiser’s

increasing need for measurable ROI on his

marcoms investment.

Pakistan is currently the world’s 25th largest

economy, growing at 3% per annum and has been

ranked in the Goldman Sachs ‘Next Eleven’

emerging markets with its new government being

elected on a mandate to strengthen and grow the

economy and infrastructure.

Sri Lanka continues to experience strong economic

growth following the end of the 26-year conflict with

the Liberation Tigers with a strong 7% GDP growth

forecast for 2013.

ASEAN and Australia

Australia, though

geographically linked to South

East Asia, is a local anomaly,

with a relatively small

population, a developed

economy, national western style culture and a

mature marketing communications sector. Saying

that, it is a large (Perth in the West is closer to

Singapore than Sydney), commodity rich continent

www.resultsig.com FIVE

Global Africa Asia Europe North America Oceana South America

MobilePageviews 10.1% 12.9% 18.0% 5.1% 8.6% 7.5% 2.8%MAY 2012

MobilePageviews 5.8% 6.7% 8.3% 2.7% 7.8% 4.8% 2.8%MAY 2011

Proportion of global web pageviews from mobile devices, by region

food exporter to Asia, which ranks the 12th

economy in the world.

Real growth in the region is being seen in the

ASEANs.

ASEAN is a diverse grouping of 10 primarily

emerging markets (Singapore, Indonesia, Vietnam,

Malaysia, Thailand, the Philippines, Myanmar,

Cambodia, Laos and Brunei).

As with all of Asia, ASEAN is diverse in terms of

size, ethnicity, religion and governance, and thus

communication landscapes, but represents an

increasing importance to the world economy with its

Free Trade Agreement in place for 2015. Today, it

has a population of 600 million, 144 million of which

are middle class, estimated to rise to 400 million by

2020, consequently gaining significance importance

along with the North and South of the region.

Singapore is the rich city-state within ASEAN, now

ranking sixth highest GDP per capita in the world.

Given Singapore's increasingly valuable position as

a regional hub for knowledge and information, it has

become the ‘go to’ region for consumer and

technology firms and agency groups and networks.

The strong talent base and Government led

business friendly environment leads to a high

number of start-ups across the marketing and

technology sectors stimulating significant levels of

M&A activity.

Indonesia, with Singapore, forms the axis at the

heart of ASEAN and is an opposite in most areas.

It is the fourth largest country in the world with a

population of 244 million, ranking only 155th in GDP

per capita.

It is a country of great potential with a stable

democratic government, consumption driven and

resource rich, with its middle-class projected to

double from 74 to 141 million by 2020. The young,

increasingly affluent and tech-savvy have led to an

explosion in mobile devices and form the largest

Facebook community in the world.

As key components of the Asian Tigers, Thailand

and Malaysia continue to diversify their economies

and significantly grow each year and with young,

educated and highly motivated populations,

Vietnam and the Philippines are gaining more

marcoms interest.

The world has great expectations for Myanmar as it

re-joins the global economy after decades of

isolation.

All the pieces are in place for Asia Pacific to

continue its meteoric rise in importance with many

commentators picking up on the rebalancing of East

and West, referring to this millennium as the Asian

Century.

If you would like to discuss this article please

contact Andrew Kefford at akefford@resultsig.com

Amaze was acquired by St. Ives in March of

this year, becoming a key pillar of their

marketing services offering. Give us a quick

overview of St. Ives strategy in marketing

services and how Amaze fits in?

St. Ives Group delivers marketing solutions and

publishing services. Whilst publishing services

continue to be a core part of the St. Ives offering,

the Group is undertaking a strategic

repositioning to significantly grow its marketing

services business. The marketing services’

division currently accounts for around 30% of

total revenue and is targeted to reach 40% by

the end of the next financial year.

The Group’s strategy is to build core

competencies across a range of marketing and

technology services that are relevant for today’s

businesses. At the heart of this strategy is to

develop a portfolio of businesses that share

common philosophies around customer insight

and emerging market forces, using this

knowledge and insight to create effective

solutions for clients.

In joining St. Ives, Amaze became a fourth

“digital” pillar in their marketing services division.

The other 3 pillars being: data marketing,

research and consultancy and field marketing.

What was exciting about joining an emerging

force in marketing services such as St. Ives

versus one of the global networks?

During our search we met with a number of

different companies ranging from the largest

advertising networks, through to smaller

networks, private equity houses and

consultancies.

What excited us about joining St. Ives was that

they wanted to keep the Amaze brand and

business as an entity in its own right. Other

options would have seen us subsumed into a

wider business or heavily restricted by controls

from Group management. It was incredibly

important to us to retain this autonomy,

particularly as we are seeing a lot of businesses

losing talent as a result of their M&A activity.

That, and a commitment to invest in the

business’s growth plans, were the key reasons we

were attracted to St. Ives. Plus, they are really nice

people and there was a good cultural fit!

What St. Ives are doing in marketing services is

relatively new so we are joining pretty much at

the start and we will have a true opportunity to

drive what St. Ives becomes moving forward.

You’ve been with Amaze since 1999 and been

CEO of the whole group since 2011. How

have the opportunities open to Amaze

changed since becoming part of St. Ives?

Becoming part of the St. Ives Group provides us

with the support and investment to accelerate

our growth (both organically and through

acquisition) and expand into new territories. This

is something we have been wanting to do for

some time.

Also, by joining up our services with the other

companies within the St. Ives group we can

augment our skills and offer a broader range of

services to our clients. For example, Incite for

global market research, Occam for customer

segmentation and CRM and Pragma for retail

consultancy.

St. Ives is a relatively new entrant to

marketing services. How have some of the

huge shifts in the market, such as the rise of

social media and tablets, created

opportunities for players such as St. Ives to

position itself to compete with the global

networks?

The world is changing quickly and we are looking

to create a new type of agency network to be

able to deliver services and solutions for the

future.

As a business, we have digital in our DNA and

deep understanding of how technology is

changing and impacting not just marketing and

communications but also business. The strategic

capability of St. Ives lends itself not just to

marketing and communications but also to the

challenges around transformation of the business

model e.g. data and change consultancy.

Bringing together those types of services through

offering a blend of agency and consultancy skills

is a very interesting proposition and gives us a

very different outlook to the global networks.

Please contact Julie Langley, the advisor on the

deal, at jlangley@resultsig.com for more details.

Amaze Interview: Natalie Gross, CEO of Amaze

SIX www.resultsig.com

Results International acted for Hasgrove Plc

has been acquired by

St Ives Group

www.resultsig.com SEVEN

SAP’s recent acquisition of Hybris

highlighted a trend we have been

seeing for some time; eCommerce

becoming a key strategic focus for

both enterprise software, consultancies

and marcoms groups. Of course it’s

not news that eCommerce is growing

at the expense of offline retailing.

eCommerce is growing at around 12-

15% per annum in the US and

Western Europe (and twice that in Asia

Pacific), compared to offline retail

growth of around 5%, and accounts for

around 10% of all retail sales in those

markets.

This trend spurred a flurry of eCommerce tech

transactions a few years ago such as eBay’s

acquisition of GSI Commerce, Oracle’s acquisition

of ATG, and IBM’s acquisition of Sterling

Commerce. However there appears to be a new

wave of activity and interest over the past few

quarters, and the focus and rationale behind this

activity has moved on from those earlier

acquisitions. Whereas eCommerce software started

life to manage store webfronts, shopping carts and

payments, the more recent deals have been driven

by the need to manage the full spectrum of

customer engagement across web, mobile, store,

contact centre and other touch points. eCommerce

is now increasingly seen as the platform for

managing all customer interactions whatever the

touchpoint, for collating data across all channels,

and then optimising those interactions.

Part of SAP’s commentary around Hybris refers to

the integration with its HANA data analytics

capabilities, to help companies spot purchasing

trends and target customers with incentives in real-

time. The company also talked about the acquisition

completing “the final mile to the customer”, hence

blurring the historical distinction between B2B and

B2C channels. This in turn ties in with the recent

spate of acquisitions in marketing automation – at

the most simple level, knowing what email to send

when, to whom and with what offers – and at a

more complex level managing marketing

messaging seamlessly across all channels.

All the enterprise software vendors have been

putting eCommerce at the heart of the offerings, but

with slightly different emphasis. IBM has been

putting its big data and predictive analytics platforms

at the heart of its Smarter Commerce and

Enterprise Marketing Management suite, using this

data layer to power, for example, Unica’s marketing

automation engine. Oracle’s focus has put more

emphasis on the integration with CRM, as of course

has Salesforce. NetSuite has also recently put

eCommerce at the forefront of its strategy with its

acquisitions of Retail Anywhere and OrderMotion,

emphasising the integration with its core ERP

offering. But the common theme has been to enable

their customers to manage the transition to multi-

channel retailing, where a customer might visit a

store, browse reviews on their mobile device, and

contact a call centre before purchasing online.

Looking at the public markets, DemandWare which

IPO’d in March of last year has been one of the

best performers amongst the SaaS businesses

which have gone public in the US over the last

couple of years. The company IPO’d at $16 a share

and, at the time of going to print, was trading at over

$40. There is clearly a takeover premium factored

into the price (the stock traded at $30 the day

before the Hybris deal was announced) but it also

reflects the increased perception of eCommerce

technology as a strategic component in the

optimisation of multi-channel retailing.

The interest in eCommerce is not limited to the

enterprise software vendors. WPP’s recent

acquisition of Salmon, an eCommerce consultancy,

was the latest in a line of eCommerce related

transactions and investments. Similarly Accenture

recently paid $315 million to acquire Acquity, a large

eCommerce agency and implementation business.

This is perhaps not surprising. Gartner recently

estimated that the eCommerce software market is

worth $3 billion annually – in itself a large figure –

but the related services and consultancy market is

worth 10x that amount.

One area that will be interesting to observe is how

far the enterprise software vendors move into

consulting (and vice versa; how far the services

players, whether consultants or agencies, move into

software). Whilst the hype is all around pure

software, we see an increasing number of genuinely

hybrid models where consulting services are used

to ensure the technology adds value and is sticky.

So what next for the enterprise software vendors

and other players in the multi-channel retailing

sector. Being able to collect data across channels,

whether online or offline, and attribute that data to

an identified individual and deliver actionable insight

to advertisers will continue to dominate.

We expect to see continued M&A activity driven by

both tech and consulting businesses across areas

such as measurement, attribution, campaign

management, predictive analytics and marketing

automation.

If you would like to discuss this article please

contact Julie Langley at jlangley@resultsig.com

Next generation eCommercedriving recent M&A activity

EIGHT www.resultsig.com

Have there ever been more

demanding conditions for marketing

agency CEOs? Setting to one side

the pervasive lingering shadow cast

by the storm clouds of the global

economic crisis and the huge impact

this has had on marketing models

and budgets since 2008, other

specific developments in the industry

have compounded the uncertainty.

Much has been made of the rise of

the role of technology in marketing,

which continues to revolutionise and

open all manner of new possibilities to

brands and agencies alike.

But will algorithms eventually replace people in

marketing? The romantic in me likes to think not, but

whatever the answer to the question it will take many

years for an answer to become clear and

unequivocal. In the meantime, however, one other

more traditional force – and one that has always

allied data, insights and systems if not ‘technology’ –

is quietly and discretely using the powershift towards

a more scientific approach to solving marketing

challenges, to build itself a cast iron position in the

high value segment of the industry. The management

consultants.

The management consulting industry occupies a

broad space and there’s no doubt at all that its

particular focus on business data and the business-

critical insights that can gleaned from them – together

with the monumental scope of programmes that the

Fortune 500 and equivalent corporations are

prepared to commission against such insights – has

brought the worlds of pure play consulting and

strategic marketing inexorably and irreversibly

together.

We shouldn’t be surprised that the likes of Accenture

and PwC are becoming recurring features as

acquirers on the marcoms M&A league tables. The

opportunity is there for them to complete the

consulting jigsaw but they can’t do it all on their own -

the talent business behind these organisations

doesn’t quite deliver the right combinations to crack

Consulting firms:building value

charge McKinsey fees to do really well from client

assignments. It would be wonderful but it’s just

not realistic, so agency CEOs would do better to

not let their pride get the better off them and

remember that their cost base is also just a shade

different too.

For all the systems, knowledge banks and MBAs of

the consultants I am firmly of that view that there’s

just something in the blood and creative genes of the

best practitioners of the agency world that delivers

something unique. Something almost priceless, but

whose value now at last we can start to see captured

and measured through the campaigns that they are

delivering.

Demanding conditions for sure. Hopeless? Far from

it. Agencies have much to admire in the best

consulting firms and should learn from them.

Undoubtedly, more of the major consultants will seek

to recruit senior agency talent or buy their businesses

and merge them into their own. It’s nigh on

impossible to envisage data and insights ceasing to

be centre stage in marketing for the decades to come

and while this remains the case, both these industries

will tussle with each other and spur each other on to

ever greater heights.

If you would like to discuss this article further please

contact Jim Houghton at jhoughton@resultsig.com

some of the most creative tasks (intentionally a lower

case “c”). The reality is that the opportunity was

probably always there for them as much that might

hurt the pride of the agency world, it’s only the advent

of a data-obsessed world of marketing that the

overall business case makes sense for the consulting

behemoths to apply themselves to it.

This does present an interesting dynamic and

potentially a counter-point to so many agency

boardroom discussions in which many of us have

been involved over the last decade or so, those

discussions about the poisonous rise of procurement

departments, the debates about the inevitable

commoditisation of marketing services, the lamenting

about the inability to charge clients fair prices for

good work.

Of course, I don’t wish to suggest that the crossover

with consulting firms will suddenly rebase pricing and

positioning for agencies (that would be simply naïve)

but where agencies are at the same table as

management consultants they must seize the

opportunity and focus the fight on how they can win

rather than assume that they will simply be out-

gunned. These occasions are becoming more

frequent and as often as not, it is the agency with the

strongest solution for the client.

The competitive sweetspot for agencies is the axis of

creativity, agility and rate card. Agencies don’t need to

www.resultsig.com NINE

The fundamentals of succession planning

If you’ve recently set up your own agency, the

issue of age and succession planning is likely to

be the last thing on your mind. Even if you’ve

been running an agency for a decade or more,

you’ve probably not given the subject much

thought.

What you should be considering from day one

however, is not only succession planning but how

you plan to bring in operational experts. While a

vision for HR, finance and IT might not be built

into your start up plans, every business needs to

broach this issue at a certain point in its

development.

In the standard agency model you generally see

two or three partners who pretty much start out

by covering everything between them. Yet this

approach can quickly hamper growth.

The time comes when they must grasp the nettle

and decide on a strategy for HR, finance and

new business in particular as well as how they

will divide up broader responsibilities between

them.

It’s vital to put in a structure where functional

heads can support and help drive ambitions for

the business while giving the founders breathing

space to focus on the long term business goals.

How to find and engage with your experts

In most cases you’ll be looking outside of the

agency for your HR, financial, procurement and

IT experts. Many growing agencies will be

nervous about making a full time permanent

commitment initially. And that’s understandable

as bringing in an operational expert for the first

time is clearly a leap of faith however well you do

your research.

Financial and HR experts are quite accustomed

to working on a part time or outsourced basis.

For an agency with a headcount of around 20 to

60 people a good quality FT and HR director on

two to three days a week is an excellent

arrangement. It brings board level capability

without incurring the costs of a full time hire. It

can also mean you will get great quality people

as many senior HR and financial people are

attracted to a portfolio career.

Doing your due diligence

Clearly taking on a senior HR, financial or new

business expert is a big step for a growing

agency. There is no shortage of people offering

their services but if truth be told, a minority truly

excel at what they do.

New business can be particularly problematic and

we’ve all heard a horror story or two. Make

absolutely sure that you do your due diligence

before you engage them. Make sure too that you

have a period of getting to know each other

before committing to any long term relationship.

Choosing the right new business resource needs

particular care. Referrals will get you through the

first couple of years but sooner or later a growing

agency will need to think about a structured

approach to growth if it is to get to the next level.

There are many options in this space. Do you

hire a new business agency? A lead generation

specialist? Or do you go for the in-house

approach?

Clearly though, as the agency founder/manager

you must take some of the responsibility for

making the future partnership a successful one.

Be absolutely clear as to their brief and what you

expect your expert to deliver for you and your

business. Consult with your senior team and your

non-executive director if you have one.

A word about HR

A good HR person will act as your eyes and ears.

As a busy founder/manager you simply cannot

keep tabs on how everyone is performing.

Reward and praise is an important motivator and

a good HR support will ensure that you recognise

personnel who consistently go above and

beyond. They will also alert you to any simmering

discontent with the agency so that you can nip it

in the bud before it becomes damaging to morale

overall.

While HR can often be seen as an admin

function actually it plays a fundamental role in

optimising the use of your people. Quite simply a

good, experienced head of HR and the function

more broadly can transform an agency. On the

flip side, it’s no exaggeration to say that bad HR

practice can destroy an agency. Putting a good

person in the wrong role or in a challenging role

without providing the necessary support can do

enormous harm.

Good practices start with recruitment strategies

that attract the best people in the industry. If your

competitors are getting these people then you

simply won’t be able to compete and grow the

business in the longer term.

A good HR person will help you identify and

attract the best candidates. They will help hone

your employee value proposition and ensure that

your onboarding and career development

practices are industry-leading.

Conclusion

In summary, it’s never too early for agency

founders/managers to think about letting go of

some of the key management functions as well

as succession planning in the broadest sense of

the word. Sir Martin Sorrell might not want to

publicly entertain the matter but you can be sure

he’s on the case behind the scenes!

If you would like to discuss this article further please

contact Keith Hunt at keithhunt@resultsig.com

Succession Planning

TEN www.resultsig.com

In 1995, when AIM was launched, it

was heralded for providing an excellent

platform for investors to engage with

young, smaller and fast growing

companies and for such companies to

raise capital to fund their ambitions,

particularly attractive to the fast-paced

TMT sector.

AIM was particularly fruitful in the mid-2000s for

a number of marcoms agencies, Cello and

Mission to name a couple, both of whom raised

capital to fund their rapid growth and acquisition

strategies.

But whilst the FTSE grew almost 16% in the 12

months to June 2013, AIM grew by only half this

amount and many of the marketing services,

technology and digital media stocks remain,

arguably undervalued.

These businesses have weathered a downturn,

streamlined operations, reduced debt and are

looking towards good levels of growth and

profitability in future years. But still their market

values on AIM remain depressed.

AIM has suffered from a dwindling supply of

investors and increasing illiquidity in shares.

Illiquidity has bred volatility and consequently,

new investors are viewing AIM shares as high

risk and new would-be AIM companies are

seeking other, “off-market” investment to obtain

capital.

For many technology companies, however, a

listing on AIM has proved to be an interesting

stepping stone en route to NASDAQ providing a

platform through which companies are able to

generate an early-stage public market profile.

Mobile marketing and technology company Velti,

floated on AIM in 2006, raising c.£10m at a price

of 100p per share. The company subsequently

floated on NASDAQ and de-listed from AIM at a

price of 1,125p per share, an impressive

increase in value.

But NASDAQ is seen as a more appropriate

exchange for technology companies, given the

large number of other technologies listed on the

market and the broader financial analyst

coverage of the industry enabling companies to

obtain a ‘proper’ valuation, whereas AIM is seen

as restrictive.

NASDAQ also has a higher global profile, and

with more and more technology companies

seeking global expansion, it makes a lot more

sense, like Velti, to be part of a globally tracked

market.

Velti isn’t the only AIM company to have followed

this route. CBay Systems, a specialist in medical

transcriptions, also made the change, as well as

OCZ Technology, who floated on NASDAQ at

more than 10 times its market capitalisation on

AIM.

The number of companies leaving AIM is,

however, contracting in its decline. In a study

produced by Deloitte, the number of companies

listed on AIM had fallen to 4% compared to 16%

in 2009.

The study also revealed that the situation for AIM

departures was also significantly more positive –

of the 113 companies that had left the market by

November, 41 were acquired, 17 were subject to

reverse take-overs and 3 had upgraded to main-

market LSE.

However, the decline of companies (and the

remaining 52 who weren’t subject to such

positive exits from the market in 2012) on AIM is

something that is being addressed. At the start of

2013 there were almost 1,100 companies quoted

on AIM, compared to c.1,700 in 2007, a decline

that the government is trying to combat in an

attempt to reinvigorate investment into small,

fast-growth companies.

The government has sought to encourage

investment in AIM principally through providing

tax breaks to investors, the newest initiative

being the removal of stamp duty on AIM quoted

shares.

Following this regime, AIM investors will be

exempt from capital gains, income, inheritance

and stamp duty tax. But the question remains

whether this will be sufficient to rejuvenate the

market. Floating on AIM does have some

benefits; profile raising, a means to incentivise

staff and a mechanism to provide a market in a

Company’s shares. But it’s no longer the ‘go to’

solution it once was.

At Results, we continue to see a buoyant M&A

market where fast-growth businesses are

accessing investors and strategic partners in a

variety of creatively structured transactions.

As with the number of buyers/ investors in the

market, these companies, before signing up to a

deal, are obtaining a wealth of different offers

and structures providing them capital for organic

and acquisitive growth.

Perhaps most aptly, earlier this year VSA

Resources, an adviser to AIM companies, said it

had plans to delist from AIM as it “would be

better for the Company to operate in the private

arena as this could enable further capital to be

raised more easily”.

With the private market so buoyant, is there an

aim to AIM?

If you would like to discuss this article, please

contact Mark Williams at mwilliams@resultsig.com

Is there an aim to AIM?

www.resultsig.com ELEVEN

Our recent transactions

On behalf of the Rainbow Trust, this

year’s Charity of the Year, Results

International and friends took on a two

day cycle ride through the Welsh

countryside. Both serious and amateur

cyclists took part, with participants

cycling between 80 and 120 miles.

In addition to cycling, participants spent a night in the

delightful Welsh countryside, enjoyed a delicious

BBQ, competed in an exciting auction and crossed

their fingers for the raffle prizes. Generously

contributed prizes ranged from a flight across the

channel, aerobatics, a day as a polo player, a rib race

across the Solent, gym membership, bike fittings, a

VISIJAX® cycling jacket and a Hosoi Penny

skateboard. The event was a great success and

we raised nearly £9,000! Thank you to everyone who

took part to support such a worthy cause. The

Rainbow Trust Children's Charity provides emotional

and practical support to families who have a child

with a life threatening or terminal illness.

Please visit the website www.rainbowtrust.org.uk

and read through the inspiring case studies to see

how The Rainbow Trust can really help transform

young people and their families’ lives.

If you would like to get involved in any of our events, do

get in touch with Sarah Lees at slees@resultsig.com

Tour de Wales forThe Rainbow Trust

Results International acted for Hasgrove Plc

Results International acted for Magnon

Results International acted for Blue Rubicon

Results International acted for Abacus

has been acquired by

were invested in byhas been acquired byhas been acquired by

Results International acted for Figtree

has been acquired by has been acquired by

Results International acted for Orbital

Results International acted for Resultrix

Results International acted for Data2Decisions

has been acquired by has been acquired by

Results International acted for Profero

merged with

has been acquired by

St Ives Group

Results International acted for AME

has been acquired by

Results International acted for iStrat

has been acquired by

Results International acted for The Group

Mark Wignall, Mobeus Equity -

“Thank you for inviting me to your fantastic event.

The organisation and the company were first class

and your team did themselves and your company

very proud. Everyone had a fantastic time.”

Nick Evans, GlobalRange -

“I had a great time and really enjoyed meeting the

other attendees. Many times this week I have

looked out the various office windows and thought

how much more I would have preferred to be

cycling through the Welsh countryside.”

WPP

www.resultsig.com

27 Soho Square, London W1D 3AY

Tel: +44 (0)20 7629 7575

Authorised and regulated by the Financial Conduct Authority

Andrew Kefford

Managing Partner,

Asia Pacific

& MENA

David Blois

Regional Director,

Eastern and Central

Europe

Hemavli Bali

Director

Keith Hunt

Managing Partner

Andy Collins

Senior Partner

Julia Crawley-

Boevey

Manager

Eduardo Steiner

Managing Partner,

Latin America

& Managing Partner,

Brazil

Arne Tödt

Managing Partner,

Germany

Richard Eyre

Non-Executive

Director

Chris Jones

Non-Executive

Chairman

Angela Lurssen

Director

Imad Kublawi

Partner, MENA

Chris Beaumont

Managing Partner,

North Asia

Sunil Gupta

Managing Partner,

South Asia

Pierre-Georges

Roy

Partner,

GroupArgent

USA

Graham Beckett

Founding Partner

& Non-Executive

Director

Jim Houghton

Partner

UK

Sarah Lees

Marketing Manager

International

Jamie Kefford

Manager,

South East Asia

Afsor Miah

Knowledge Manager

Sheungyu Cho

Analyst

Maurice Watkins

Partner,

GroupArgent

USA

Andrew Dysch

Head of Finance

Drew Meyers

Partner,

GroupArgent

USA

The team

Anthony

Harrington

Manager

Sherif Hegazy

Analyst

Harriet

Rosethorn

Analyst

Kevin Bottomley

Managing Director

Julie Langley

Managing Director

Jo Crawford

Office Manager / PA

Emily Wickham

PA

Mark Williams

Manager

Vikky Gray

PA

Bridget de Lima

Senior Analyst

Daniel Lee

Analyst

Carrie Yang

Senior Analyst