News that Dentsu Aegis Network (DAN) bought a 52.05% stake in creative agency, FoxP2, has highlighted a trend that’s seeing media agencies and creative agencies increasingly working closer together again.
Dawn Rowlands, CEO of Dentsu Aegis Sub-Saharan Africa, says because only 15% of DAN’s revenue comes from creative, she sees the buyout of FoxP2 as an opportunity “on many levels”.
The media environment, she says, is a great deal more complex, agile and connected than it was years ago and is more important to a client’s business than it was ever before.
“An effective media platform and ecosystem can deliver a real business outcome. When we combined a great media ecosystem with a great organising idea we see exponential brand growth. This can be provided through collaboration, whether the media agency and creative agency are in the same business or not,” she says.
Rowlands says Gordon Bowen, founder and ECD of McGarry Bowen (part of the Dentsu Aegis Network) “globally sees FoxP2 as a world class agency and sees an opportunity for global collaboration”, she says.
“Dentsu Aegis has a number of global clients entering the African continent. They are looking for ‘good innovation’ regionally, which FoxP2 can deliver without fail. Lastly, many of FoxP2’s South African clients are looking at rapid regional expansion. DAN SSA have the network across the region and can accelerate this for clients,” says Rowlands of the advantages of the deal to existing clients.
Rowlands says DAN SSA and FoxP2 have “very similar values and aspirations across the region. DAN SSA is a diverse business not only focused on Media; 40% of regional revenue comes from digital already”.
The deal, which took a year to conclude, was put together by Novitas Capital Advisors. “When we first started discussing an international sale with FoxP2, the partners were not sure if selling to a large international advertising network was the right move for their innovative and independent creative agency”, says Novitas co-founder, Bradley Conarroe.
Novitas says the merger was structured in a way that allows both parties to expand their offerings while at the same time stay true to their respective visions. “This was a very important aspect of the transaction, especially to FoxP2, who wanted to maintain their creative identity and culture of innovation, the company said on its website.
“Together with Novitas Capital Advisors, we looked at all of our options. We are convinced that Dentsu is the best fit for our creative culture and offers the greatest opportunity for us to continue producing innovative creative work, but on a bigger stage with global brands,” says FoxP2 ECD, Justin Gomes.
The deal isn’t just between DAN SSA and FoxP2 as an Empowerment Trust has been created too. “The Empowerment Trust has been set up to empower key previously disadvantaged staff members by allocating units in the trust which is linked to a monetary value,” Rowlands explains. “As the business grows in value the monetary value of the units will grow proportionately.”
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