TMG vows to solve the scale issue for small agencies

ASIA-PACIFIC - Little-known Sydney-based creative agency Channelzero offers high-end video production, but it isn’t commercially viable for clients that have no budget for above-the-line media spend.

With a little help from holding company The Marketing Group (TMG), Channelzero can now acquire an agency that will offer clients video production that is uniquely for social media and delivers a high volume of content.

“We have at least eight clients that need this from our business, and we expect the tactical acquisition to boost our EBIT,” said Mikey Taylor, founder of Channelzero in Sydney, which was acquired by TMG in August 2016.

Channelzero is one of 19 businesses TMG has purchased since launching last year. The company has over 500 employees in 32 offices across the US, Europe and Asia-Pacific. Singapore was chosen as the test bed for the model because of favourable government initiatives.

For Taylor, the other big benefit is having a seat at a bigger table. “We can be small and nimble when it suits us and our pitch, but we can also point to a monstrous market cap when the client needs to see global reach and credibility.”

TMG’s mission is to provide small businesses with a level playing field. Indeed, it is rare for small, independent agencies to win big contracts. “Often times in the marketing industry, a small agency gets acquired and founders last 12-15 months and earn a fraction of what they deserve,” TMG co-founder Callum Laing told Campaign Asia-Pacific.

TMG’s businesses straddle creative, media and digital video. According to Laing, who is adamant that the founders keep control, the company typically seeks businesses that are debt-free and are profitable industry leaders. “Right now we don’t have competitive businesses within the group. But we’re open to it and would love to be in a situation where we can offer clients everything.”

TMG went public in June this year with the aim of becoming one of the top five holding groups. “You can’t grow an agency without taking on funding, but that limits your options," Laing said. "If you belong to a PLC you have a lot more options."

There are a number of benefits in becoming a publicly traded stock and in going from one agency to 19 today and 200 next year, said Laurent Verrier, founder and CEO of Singapore-based One9ninety. “By listing on Nasdaq, One9ninety’s shareholders found liquidity," he said. "But the truly fantastic virtue of TMG’s agglomeration model is how it perfectly aligns partners. Each of us directly benefits from the success of the other.”

Verrier claims that TMG’s model is “better than any other big agency approach” he considered. “It maintains founder autonomy in running our business, and I remain fully in charge of the P&L, my staff and clients.”