In 2012, the Indian digital industry has seen number of digital agencies being acquired by foreign biggies. It all started in April 2012, with Publicis Groupe acquiring Mumbai-based digital agency Indigo Consulting to make it operate as a unit within the Leo Burnett Group in India.
This was followed by WPP-owned JWT Singapore acquiring a majority stake in Hungama Digital Services, the digital and promotions marketing division of Hungama Digital Media Entertainment Private Ltd, in June 2012.
August 2012 saw three Indian agencies getting acquired by multinationals. Publicis Groupe acquired Mumbai-based performance marketing agency Resultrix to operate it as a unit within Performics. This was followed by Aegis Group acquiring Communicate 2, one of India’s leading performance marketing and search agency in India. There were also some reports that Interpublic Group was close to acquire digital marketing agency Interactive Avenues for an undisclosed amount.
India Digital Review wanted to take a look at how these agencies were doing in terms of revenue and profit and what actually made them the ‘company of choice’ for the foreign multinationals. The figures have been extracted regulatory filings of the companies.
Why were they bought?
Indigo Consulting:
For the financial year 2011, Indigo Consulting had achieved revenue of Rs 10.5 crore, out of which, their Profit After Tax (PAT) stood at Rs 2 crore. Indigo’s major clientele include Hindustan Unilever, Asian Paints, HDFC Bank, Kolkata Knight Riders, Abu Dhabi Commercial Bank, Thomas Cook, South Australia Tourism Board, MakeMyTrip, Cathay Pacific.
Explaining their reasons of acquiring Indigo Consulting, Tom Bernardin, Chairman and Chief Executive Officer, Leo Burnett Worldwide, said, “From a global point of view, the potential and opportunities that India offers are massive. Over the years we have increased our efforts into this important market. Indigo Consulting, with its strong track record as a full-service interactive and technology agency, is the perfect strategic fit for our aspirations in India and around the world.”
“Our growth strategy for Leo Burnett in India and Asia Pacific is based on two core pillars: digital and shopper-marketing,” said Jarek Ziebinski, President of Leo Burnett Asia Pacific, adding, “India is a key market for us, and it’s reporting explosive growth in the digital sector. We want to make sure Leo Burnett has the right infrastructure in place to meet the needs of tomorrow. I also see Indigo Consulting developing beyond India, to become an important player within our network in Asia Pacific and globally.”
“This alignment means we will bring our world-class digital marketing capabilities to Leo Burnett’s clients, while also benefiting from additional knowledge and insight on brand and creative communication through cross-training and collaboration,” said Vikas Tandon, managing director of Indigo Consulting.
Resultrix:
For the financial year 2011, Resultrix had achieved revenue of Rs 2.8 crore, out of which, their Profit After Tax (PAT) stood at Rs 70 lakhs. Resultrix’s clientele comprises of Corbis Corporation, Max Bupa, Standard Chartered Bank, Airtel, Cleartrip, DBS Bank and Emirates National Bank, among others.
Citing reasons for choosing Resultrix, Daina Middleton, CEO, Performics, said, “Clients are demanding best-in-class specialized skills and seamless digital integration at scale. Resultrix has an impressive track record as a leading search and interactive services agency. Their highly sophisticated suite of digital solutions perfectly complements our offering and will solidify our leadership position around the world.”
Srikant Sastri, VivaKi Country Chair for India, adds, “India promises huge growth potential and opportunities, especially in the area of digital. This investment demonstrates our commitment to developing our networks in fast-growing and important markets and sectors.”
Vidur Luthra, CEO for Resultrix, had said, “We were founded on the belief that digital advertising provides the opportunity to disrupt the traditional media business models and this is a great opportunity to join a network that is renowned for being at the forefront of the industry. It allows us to realise our ambitions and leverage our skills, strengths and experience across a larger group footprint which is of huge benefit to our clients and teams.”
Communicate 2:
For the financial year 2011, Communicate 2 had achieved revenue of Rs 3 crore, out of which, their Profit After Tax (PAT) stood at Rs 30 lakhs. Communicate 2 has clients such as Tata Consultancy Services, Cleartrip, ICICI Lombard and HDFC Bank, and international businesses including Travelocity, Aviva Insurance and American Express.
Explaining on closing down to Communicate 2, Ashish Bhasin, Chairman India and Chief Executive Officer, South East Asia, Aegis Media, said, “Communicate 2 is India’s pioneering search and performance marketing agency and Vivek is a well known guru in this field. I believe that search will be the fastest growing part of our industry for the foreseeable future and as part of the iProspect network, Communicate 2 will continue to be the undisputed leader in this area. I have also invited Vivek to join the Aegis Media India executive council and look forward to seeing iProspectCommunicate 2 going from strength to strength.”
“My entire management team and I are very thrilled with this development, as this gives us a much larger canvas to paint on and gives us access to global tools, knowledge and the scale of the iProspect network. Globally over 35 per cent of Aegis Media’s revenues come from digital, highest amongst all media groups, which made Aegis Media the best choice as our partner,” said Vivek Bhargava.
Interactive Avenues:
For the financial year 2011, Interactive Avenues had achieved revenue of Rs 18.3 crore and their Profit After Tax (PAT) stood at Rs 4.1 crore. Their prime clientele include ITC, ICICI Banks, FedEx, Durex, Intel, ESPN.
The above figures and analysis show the amount growth these companies have witnessed over the years and also the kind of growth Indian digital advertising industry as a whole has achieved. Experts believe that this year will be an year of mergers and acquisitions for the Indian digital agencies and there will be more buyouts and listings coming in the near future.
