Media buying group Aegis is on the brink of selling its Synovate research arm to French research firm Ipsos for £500m (unless other bidders including private equity firm Doughty Hanson agree to pay more).
Which would surely leave Aegis, headed by CEO Jerry Buhlmann, as a media-only play and one likely to be attacked by its bigger marcoms rivals like Omnicom and Publicis Groupe. Or maybe Havas, whose chairman Vincent Bollore owns a 26.5 per cent stake in Aegis.
Well not quite.
Aegis also owns Isobar, a big digital-based network with over 2,000 people working in 32 countries. And also Mitchell Communications, an Australian media-based based group it bought for the thick end of £200m last year.
Mitchell did indeed start out as a media buyer under founder Harold Mitchell but it now owns a ragtag of research and consultancy businesses. So it’s more than just a media buyer.
And what is Isobar? Like many such digital companies it doesn’t seem to be exactly sure what it is, claiming:
We bring people and brands together, like never before. We reconnect brands with their fans and customers. We create irresistible ideas that combine creative, planning, technology and data. Ideas that demand a response, that invite a next step, take on a life of their own, become self-financing, self-perpetuating, get picked up, passed on. Ideas that make it inevitable people will choose to get involved.
So it’s a creative agency then? Anyway it seems to be doing quite well. But media it ain’t.
Now Aegis has bought an $11m minority stake in Aussie firm TigerSpike, a mobile communications specialist.
Mobile marketing had been around for years without really taking off until the invaluable Steve Jobs of Apple produced his first tablet iPad in April 2010.
And because you can do a lot more on an iPad than a phone (apart from make calls) and it’s bigger, mobile advertising began to head for the stratosphere. Hence (part of) the attraction of TigerSpark to Aegis.
Now. of course, the world is awash with iPad-style tablet computers and just as awash with agencies of various kinds who want to help their clients get the best out of the groovy new devices.
For a media buyer like Aegis, the biggest independent in the world, there is clearly the option of developing products and services with higher margins than are available in conventional media buying. The analogy would be out of home advertising (in which Aegis has a big presence with Posterscope) which enjoys margins of up to 30 per cent justified by the supposed complexity of planning and buying an ever-changing and fragmented market.
Achieving higher than average margins is what Aegis sought to do (and largely failed to achieve) with the Synovate research business.
If Synovate goes Aegis will be awash with cash and it’s in its interest to start spending it as rapidly as possible if it wants to stay independent.
So TigerSpike may be a tiny deal but it reveals where lots of the money will go: to bright new technology businesses who can sell their services to Aegis clients at a premium.
The other interesting question is: where does Isobar fit into all this strategically, assuming it does?
Over the past two decades media independents have been snapped up by the big advertising-based marcoms companies: the UK’s MediaCom, CIA (now MEC) and poster specialist Poster Publicity (now Kinetic) were all gobbled up by WPP for example.
Aegis CEO Buhlmann would love to see some traffic the other way but he’s hardly likely to make a bid for Wieden+Kennedy or Mother (well we don’t think he is).
But he has a substantial creative network in Isobar that majors on digital and therefore knows about technology.
If Aegis could build this up through adding in its growing number of clever new tech companies then it would hardly miss Synovate. And it would have a better chance of staying independent.
But it needs to get its skates on. So expect lots more deals.