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Insights, Marketing & Data: Secrets of Success from Industry Leaders
Insights, Marketing & Data: Secrets of Success from Industry Leaders
GREEN SQUARE - Tony Walford, Co-founder. The 7 key drivers of financial value for agencies. What do you need to get right if you're looking for investment in your marcoms business? Value propositions; what's hot/ what's not; PE vs strategic.
Have you ever wondered about how the best key criteria to build, value and potentially sell a marcoms agency? A lot of the answers are here in less than 50 minutes! Not only has Tony Walford built and successfully exited his own group, but he's also represented some of the best businesses in the marketing space....and shares here advice and perspective on:
- The importance of insights
- How insights agencies should charge
- How to think about client diversification
- The 7 key value drivers for agencies
- PE vs Strategics
- Where the M&A market for marcoms is now.
And you'll discover how music is in the blood, with a couple of more offbeat book recommendations than we usually get! Enjoy.....and any thoughts, recommendations or objections let me know at futureviewpod@gmail.com
All episodes available at https://www.insightplatforms.com/podcasts/
Suggestions, thoughts etc to futureviewpod@gmail.com
I think, with all insight also, there is a danger that people within these businesses tend to be kind of in a bit cottage industry. They love what they do, they love the craft of what they do and therefore they don't charge properly in the first place or don't value their output properly. And I think you know we're going to charge on a daily rate because this is it. I'm quite happy to receive that. But if you're building a group or building a business, you can't operate like that. You have to look at what the problem is and charging to solve the problem and giving a fee rather than the sort of working it out on a spreadsheet of time management.
Speaker 1:Welcome to Futureview and it's slightly different interview with Tony Wolf at a green square. Now. This episode focuses on key factors to consider and great advice. If you're a tech platform or agency, you must prepare yourself for some type of investment, so that could be for a full sale or a capital infusion to get you to the next level. Whatever the case, tony has a very pragmatic perspective to help guide you, as well as a really good take on the market as a whole. Tony's also had a fascinating professional career himself raising capital, building up and selling his own business in the Markov space before setting up a corporate advisory firm to help others do the same. You may also get some great tips on bands listening to find out what I mean there. I'd also like to take a moment to say thank you to Brighter for sponsoring this episode. Brighter is an international research and insights consultancy specializing in healthcare technology, telecommunications and gaming. You'll find that more at Brighter-globalcom. That's Brighter with a Y, so B-R-Y-T-E-R, then globalcom.
Speaker 1:Now on to the interview. So, tony, firstly, lovely to see you actually after a while. Thanks very much for joining today. Thank you, you're welcome. Nice to see you, brilliant. So if we could start with a little bit of an icebreaker. We're going to get into your corporate history and all the interesting deals you've been doing, but what's something most people wouldn't know about you? Not necessarily Deeper's darkest secret could be, if you want to be, but just something that isn't in the public domain.
Speaker 2:At 17, I was a guitarist in a band that got a contract with Warner Brothers with the promise of a tour in the States, so I spent my last year for mucking about in studios. Warner then tried to turn us into foreigner, which we hated, so the whole thing fell apart. I felt my last six exams were not kicked out so I restarted six form another colleague Thanks to my A-level subjects, from chemistry and physics to economics and accounting. And then I went to uni and did a four-year business degree, majoring in finance and marketing. So rest is history, really, but I still have my 76th Bender Strat.
Speaker 1:Yeah, that's what that was, was the obvious question I was going to ask what did you play, and do you still play?
Speaker 2:I don't play so much now. I still have my fabulous guitar. But my children, my boys, are both accomplished musicians at 22 and 25. And they've both been in various successful bands on their streets ahead of me. So I think you've got between all of us. I think you've got something like 14 guitars and basses and various bits and bobs, so most of which is stored in our house, even though the kids both live out in the house.
Speaker 1:Well, maybe with the development of AI it can be like this new Beatles song. You know they can extract your original work dodgy recording and add it into theirs.
Speaker 2:Yeah, be a very dodgy recording. I certainly wouldn't suggest any of that. But no, I'm not going there. My kids are far, far better and far more interested.
Speaker 1:Well, I'm sure it must have been pretty good for you at Warner's to sign you up, even if they tried to turn you into some commercial proposition that you it was easier in those days because there wasn't so many bands about, so you didn't actually have to be that good to get recognized.
Speaker 2:You just needed a good manager who could get you in front of the right people at the right time. So these days there's so many people producing great music and it's all freely available on everything, particularly places like SoundCloud where people push themselves, but you kind of it's hard to choose and it's really hard for bands to get noticed. So you know, both my son's bands have huge followings, lots of streaming, but neither of them really broke it and you'd be listening to their stuff and everyone that listens to it or watches the video goes. This is amazing, but it's really so difficult these days. Back then it was really down to supply and demand.
Speaker 1:Go on. You've got to take the opportunity now to give a shout out to your son's bands for this podcast audience. This could make or break them. You know the hundreds of listeners we have on this.
Speaker 2:Now, well, both of my oldest son is no longer in a band at the moment. He wasn't a band called Caltech that you can find on Spotify. Tracks like what would it take you can see on YouTube. But he's also in a band called Flat Party who have just signed a contract that is left because he actually works for an ad agency and that was involved doing a six week tour and all that sort of stuff. So Flat Party you can also see. They've been on Radio 6 quite a bit. My youngest son I'll come back to Jamie he also does a lot of techno and electronic music, so Primrose is his sort of DJ name. You can find out on Spotify too Some of his things there. My youngest son, will, is in a band called Drivers, which is Manchester based. I think they're the second biggest student band in Manchester. There's no longer a student there who's left, but he's been in the year. That has their bands growing quite quickly.
Speaker 1:Fantastic, I will look them up. I'm not what they describe as a Radio 6 dad. However, I will make an effort. I am a Radio 6.
Speaker 2:Dad and Will's band supported a band recently called Marusia. They're on Radio 6 a lot and he said at the gig he said you would have loved it, dad, it was full of Radio 6 dads Well there we go Now talking about good managers.
Speaker 1:how did you, what was your journey of moving from, as you said, studying business and accounting, economics, marketing, all that type of thing at university and then ending up at Green Square? And why Green Square and what does Green Square do?
Speaker 2:Yeah, I've had a pretty interesting ride, to be fair. I joined Midland Bank on their finance graduate scheme in 1989 after my business degree Qualified SEMA I'm a chartered corporate treasurer as well did that fairly quickly, then moved into the investment banking side doing internal M&A for Midland Bank itself in 1991. With Andrew Moss, who's another partner here, we actually both trained together on that scheme. Midland Bank ran out of money in 1992. We sold it to HSBC. We're part of a really close knit team. Following which I transferred to HSBC, really enjoyed the M&A side still, but I just didn't want to get trapped in the city. I just didn't want to get stuck doing investment banking for the rest of my days. Although I enjoyed the M&A side.
Speaker 2:Turn and roll came up at a big US systems firm called Unisys which I took and subsequently got promoted to CFI of their biggest UK bit. I was there for a couple of years. Then in 1996, we got headhunted to join a PLC as Chief Operating Officer of their Marketing Services Practice, which was a group of five marketing agencies. The rest of that group was actually in sort of industrials and things like that Turned out. They're thinking of IPOing this whole marketing services business separately, which never would have worked because it was insizable. I didn't want it to be one of those companies that end up floundering about our name and not going anywhere.
Speaker 2:So the CRI and I got together and got PA backing from 3I to do a management buyout. We did that in 1997. We built that group for a mix of organic growth and acquisition and ultimately became second biggest independent in the UK. We sold it in 2007 to Australia's in Europe. But during that time I had various different side hustles helping various friends with their businesses, which was great fun, really enjoyed that and learned a lot from working with a lot of people. But I think ultimately, having hands-on investment backing, bending background, relevant qualifications and a personal experience of building an existing and marketing services group, it made perfect sense to set up a specialist mark on M&A house, which I did with three very talented people back in 2008.
Speaker 1:So you stuck with marketing services? I mean, it seems like you fell into the marketing services world, but then why did you decide to double down on that, apart from the fact you had experience in it? I mean, some people run a mile from marketing services once they've seen what's involved. But what pulled you into it?
Speaker 2:I think I've always been a very creative person and the bizarre thing is and I sound too esoteric here but having had mates of mine that have done pastro charts and that sort of stuff, they've said if they didn't know what I did for a job, they never ever would have placed me as an investment banker or doing corporate finance or being an accountant.
Speaker 2:They said that everything about me shows I should be a creative director or a film director or something in music. So I kind of, I guess, because creativity fascinates me and I kind of adore it. Being in marketing services is that out there. So working for these sort of businesses in the fear I find really interesting. And the people within the road is really interesting because you got a lot of people who are very less sort of field and quiet. You know I'm bullish being in this sort of area and I quite like that because I'm quite quirky myself. So working with people that are great creative businesses what's interesting? Propositions is the thing that really drives me and that's why we're in this sector and rest of the party is the same.
Speaker 1:to be fair, yeah, I'd like to zoom out in a moment on marketing services, that the consumer inside businesses, or market research businesses that they used to be called one, can debate what they should be called. That is not a sector that has been renowned for creativity, necessarily, so how come that became part of the mix?
Speaker 2:in terms of green squares representation, yeah, it's kind of already, I guess. I guess the key thing is we actually shareholds marketing services companies. On Saturday the average is the choir best fit. So that strategically, chemistry, of course, financially we often want to get them there as well and help them with their strategy and get them ready along the way. So inside, something we sort of is is aligned to it. I can't. So everything from traditional full service out of the group streets of performance, marketing, data, tech, medcom, healthcare, experiential but inside kind of pervades a lot of that sort of those sort of businesses.
Speaker 2:I have a bit of background in it because of the fact that corporate ages business I built. We had a company in there and that drove a lot of what the rest of the group did. Sweet, we did a lot of brand, corporate brand work and best relations, so the annual reports, things like that. But the branding side was driven by insight. So we'd always put a client into the insight team before we did anything else. So when we sort of set green square up, research was one of the things on our list and inside that we would work with because, yeah, okay, as you say, it's not necessarily seen as being creative but it does actually influence everything, and and starting with research is something that's always quite important to us.
Speaker 1:Yeah, I well, obviously I would agree with that, given my background. I mean I want we might go off schedule a little bit, but do you think there's an argument that it's becoming even more important recently, in that at one stage say five years ago, for the sake of argument there seem to be a sense in the market that traditional consumer research by which I mean asking people questions from the menu and then you can run lots of fancy techniques on top of that Was going out of fashion, that it's all about big data, so on and so on. But then you seem to, over the last five years or so, it's been a realisation that there's now so much data. But you actually need to understand why things are happening and you need people who can ascertain what's relevant and then analyze it and turn it into outputs that you know that businesses can act on and they can use, and so to me it seems to actually be coming back into vogue.
Speaker 2:Yeah, I mean, I think yeah, I think what's been interesting, if you look at the research transactions that we've worked on and acted for, there's a mix. So some of it's been quite broad. So some of it's been 30 people, consultancy focus specialists, people at jigsaw circle, rain makers, csi, who are really focused on that sort of consultative Looking at the outputs, filtering it down, working out and solving the problem for the client. So it's almost moving into brand strategy Because that's exactly what they're doing distilling. But other transactions we've done that have been really successful in 200 people plus big one call syndication players like cadence, which we sold to cross marketing in Tokyo and be to be international that some bought by them.
Speaker 2:So it's a broad mix. But I definitely say that ability to filter down the noise because anyone can do a survey now, because it's all free survey monkey and you got rent and rate for the sort of things, the everyone can do that. But it's what you do with the information. That's key. I think there's a real space for those sort of consultative. What the strategy inside agencies that Drive results?
Speaker 1:and do you find those questions, those strategy focused agencies? Do they end up having to focus on particular sectors to have sufficient knowledge to really be able to provide the advice? That's the first component of it. And secondly, are they beginning to be able to charge like consultants? This is something we've touched on before, whereby they're providing potentially great advice but they just. The business model is almost an old cost plus business model In terms of, you know, survey cost for interview, that type of thing, rather than a tree consultancy model.
Speaker 2:Yeah, I think I think these sort of agencies have to position themselves as consultants is in the first place. I think it's quite hard to go from being seen as a research agency to then try and position yourself as a consultant agency, even if you are with the existing clients. It's normally the new clients that come in if you're seeing this consultant, so we'll pay the money. We have also had situations where you know we've done transactions for people where, because they've become part of a consultancy or a bigger group, it means they can now charge more fees. And there is that kind of psychology that everyone, you know, no one got five from hiring IBM or whatever from the old days and it still pervades now. So then I think, with insight also I can't share the question about being specialist in a second I think, with all the insight also, there is a danger that people within these businesses tend to be kind of A bit cottage industry. They love what they do, they love the craft of what they do and therefore they don't charge properly in the first place or don't value their output properly. And I think you know we're gonna charge a daily rate because this is it. I'm quite happy to receive that. But if you're building a group of building a business, you can't operate like that. You have to look at what the problem is in charging to solve the problem and giving a fee rather than the sort of working it out on a spreadsheet of time management. So I think there's that side of it. It's certainly the more successful inside agencies we see those got people that are not doing research on the day to day themselves. It's very hard to grow from that. And back in the day was another place. We did flamingo deal years and years ago and that was a really successful agency because they had cursey and Maggie at the helm running the business and then they had divisional directors heading it up within that are really strong as well. So it's a proper flow down model.
Speaker 2:Coming back to your point about being specialist in particular area, that is actually important. I think as a 30 person agency in strategy or consulting, you can't really be all things to all people. You have to really understand a particular part of the market but you don't have to just focus on one thing. If you take someone like Jigsaw we've mentioned, or Rainmakers or indeed Sturkel, they all had areas that they were really really strong in, but two or three. It was kind of like financial services. It was healthcare, the tech that side of it, and less of a sort of more generalist FMCG stuff that you can get anywhere Most of them have. In fact I'm just talking about those three to be honest, because they're not dissimilar sizes. They all had not necessarily well, client dependencies can be a bit of an issue, but they had three or four very strong clients within that that had been with them for a very long time. I think that helps. That helps with the business.
Speaker 1:So, from an aquarist perspective, that gives them, even if they're not centrally contracted, contracts on the basis of we're going to pay you X per year. But it reassures them in that they can see certain big companies within certain consistent sectors are coming back year after year. Yeah, what?
Speaker 2:you don't want is a big dependency like more than 25% well, more than 20% really in a single client. But in the smaller consultancies 30 people you often will see that you'll see sort of 30%, which can be an issue for aquarists, because if you're making a sort of 25, 30% margin you lose that client and things just go on to break even. But unfortunately that is a nature of insight and research. They tend to be quite sticky with their clients and they become more or less they're almost like embedded into the clients and it becomes their research department, if you like. So that's how they're seen. But yeah, I think it's a particular nuance within the research insight sector that you get these long term relationships and deep understanding and expertise of these particular markets. But equally, that's attractive to aquarists, particularly if they're looking to plug a certain area that they do not have expertise in. It can be quite attractive.
Speaker 1:Yeah, I could see it's a double-edged sword, isn't it? It gives you the stickiness, but it gives you exposure if something goes wrong. What do aquarists think in terms of relationships with corporate groups, though? So I'll make it up. Someone like a BT would have lots of different brands within BT, so does that give them some degree of reassurance? You probably got to show that they're able to, and thinking that thing is through as I go along that there are actually different buying centres within BT, so the EE is commissioning separately from BT broadband or whatever.
Speaker 2:Yeah, yeah, yeah. This is kind of an age-old problem because we have a lot of clients that come to us who have got that sort of situation going on. They'll say but the thing is there's no umbrella agreement over the top. That makes life a bit easier because if your contractor downs an umbrella agreement across the entire organisation, then one person can turn that switch off, no matter what everybody says. But where you have different contracts within different bits of somewhere like BT in all different areas, it gives aquarists more comfort.
Speaker 2:We always try to make it obviously clear that the risk is minimal of having over-reliance when that situation is there. Unfortunately, aquarists they don't like the risk of it. But also a DDT, when they come in, will look to use this to their advantage in terms of negotiating something around the price or structure, though we've had situations where people have said well, actually ClientX is over 30% of your business, which is always a real challenge. Therefore we want to pay less, a multiple, because there's more risk on that. We'll counter it with. Well, I'll tell you what.
Speaker 2:Then, by the moment that our client is doing 2M EBIT or whatever it is, and as long as we're still doing at least 2M EBIT within the next two years year one, year two, year three regardless of the mix of clients. Then we will claw that multiple back because we're still delivering it. So it could be we lose that client and replace it with somebody else or we keep the client, doesn't matter. So we've done deals like that, where we have actually dropped to 2M multiple points but clawed it back over the next two years simply by proving it's still there and that the EBIT is still there, because that's ultimately what the aquarist buying is future performance. They pay a multiple on current profits because they expect the business to grow and to still be there. So if you can mitigate that risk for people, it helps, but it is a problem. And DDT, but they will use it to their advantage.
Speaker 1:In terms of the way Green Square operates. Would you be paid then contingent on those types of results? If you help a client negotiate on that basis, then you'll claw back some of those EBIT points. I imagine you probably have a structure whereby there's a certain retainer you've got in place, you get AFI, but then do you also operate on the basis of performance related? Absolutely.
Speaker 2:That's exactly how we work. We're quite different to a lot of our competitive set in that where AFI's follow our clients deal value. So, yes, we have retainer based thing, which we do, which obviously people got to be committed, and we're investing an awful lot of time for what's really not covered anywhere near on the retainer. So the majority of our money comes on success, which is why we don't like taking things on. We don't take things on if we don't think we can get them away because it doesn't work for the client and it doesn't work for us either. But in that scenario, with any scenario, we receive our fees as a percentage when our client gets it. So we'll get our percentage of the initial payment when it arrives. If it's deferred, then we'll get a percentage of the deferred when it arrives and on the earnouts when that gets paid, we get a percentage of that.
Speaker 2:We don't charge retainers beyond completion, so we do not charge retainers during the earnout process or any of that. But we are absolutely wedded to our clients throughout that process to see everyone's interest to do so. And even when the earnouts been pretty pulty, frankly, and our fees been not great, we still stick to them like glue is what we do and we're quite well. We really become integrity. So you can talk to any of our clients, some of which the earnout fees ended up being sort of like 50 grand or something which isn't here or there. For us that was from sound arrogance after sort of three or four years, but we've put the same amount of that effort in as we would for much bigger deals.
Speaker 1:And then you will stick with them, even though you're not on a retainer. Do you try and advise them at all?
Speaker 2:Yeah, we're always there for advice. So people phone us up all the way through the earnouts for advice and help and what they should do, because there's all sorts of things happening in an earnout and we often find that the deals have got to be restructured partway through simply because the nature of the acquisitions change. People might want to integrate it fully, they might be bought themselves, it might go into a different area. So we're there for that and we don't charge additional fees for that and as part of our own out percentage, it's just what we do.
Speaker 1:But just in terms of the fundamentals. I mean, what are purchases looking for out of companies, let's say in the insight space, just to narrow it down a bit as opposed to marketing services in general?
Speaker 2:Yeah, okay, I think actually you can look at it. It doesn't matter whether it's research or marketing services or any businesses. There are seven key value drivers that acquire as that. For that we focus on and they might not articulate the quarries, might not articulate it the same way that we do, but the key things are first, one is proposition. There's what do you do? How do you deliver the work, what are the processes and methodologies? And it's kind of like making sure that it's always the same sort of thing about standout USP and all of that.
Speaker 2:But you need to be really clear about what you're offering is. You don't want to be humdrum, you need to kind of. You know you've got to have something that differentiates you. So I just remember that one of my lads he's a reading festival, the Metallica were closing it and he was at the front and he said this is being streamed live, have a look. So I put it on and that's great because basically the band came onto the stage and there was a whole build up to this thing, right, and the three of them come on the stage and old crowds going absolutely nuts, and James Hepfield steps up to the mic and he just says we're Metallica and this is what we do. And they go straight into it and it's like the crowd just go ballistic and I sat there and thought that is the best articulation of a proposition I've ever seen in my entire life, because they do one thing and they do it brilliantly and they're best in best of what they do. There's no one better. So you know, they're not the only people doing what they do, to quote Jerry Garcia, but they are the best of what they do and that's what you need to do.
Speaker 2:Proposition is absolutely key. So if you've got a really clear proposition and something that's not sort of blurred in the market with everybody else and you've got good processes and methodologies, that that's your first starting point. Your second point really flows onto that. That's market positioning. So how do you present within your peer group your competitive set? What is your differentiator? Why should clients choose you over the others? Why should they buy from you? The proposition and positioning absolutely key. What is the intention? Days and half the day spent on that I'm really understanding if you look at the way.
Speaker 2:A bit of advice for agencies research, anybody. Take a look at your website and stack it up next to your competitors. Not that you say the same things. We're more strategic, we're more creative, we have better insights. Anybody else? We got better methodologies, better service. I'm saying the same thing. So you need to look at that, work out what you can change.
Speaker 2:The next team how is your organization structure? Do you need to look at the key people. Make sure that. Incentivize properly the choirs want to see. It doesn't have to be broad on everybody in the organization like in the other chunk of it. Be on the cq people With some kind of equity incentivization, be an option scheme, a growth scheme. What? What turns the choirs off Is one or two people who are sort of getting later in life with all the equity between them and nobody beneath them being incentivized because there are worries that are paid a decent chunk of money and these people just head for the door. I'm gonna get a second tier saying hold on a minute, we didn't get anything. What's in it for me? Otherwise I disappear. So that is so important. Some of the choirs actually stipulate twenty percent minimum and equity options in the team to make sure it's protected and it's better to have a smaller part of a much bigger party.
Speaker 2:Then next thing's financials, obviously. I mean it goes without saying, and bias panels for the be a bit, as I said earlier. So I want to see growth. You need to demonstrate consistent growth over a period not flatlining with the right metrics. So this is things like you on your growth in gross profit, not turn over, but look at your turn over to field. No show your research company because I can vary depending on the type of work you're doing. But growth in gp on is really important. Your staff cost ratio is absolutely critical and stuff cost to gp. Not to turn over. That should be between fifty five, sixty percent and your ratio, which, if you're in an insight space doing consultancy, should be looking somewhere between twenty to thirty percent. I would have clients doing more than that. Where they've been particularly consulted different, they've been up towards a forty percent ratio point.
Speaker 2:You need to be understanding your numbers, not so the ability to forecast. So you have underperforming on a forecast is as bad as missing it, because people wanna know with some certainty when they're buying you that they can see whether growth can be. You understand your business, cover the things. Growth strategy this is the most important thing actually in all of it that bias look for and two areas you wanna, if you think about it here, the sheet of a three, if you put on the left hand side how you gonna grow it was not your request as a stand alone what you do, what's your growth strategy, what, what things you embarking on and you have a couple that you're already doing to prove they work.
Speaker 2:I'm gonna write hands out of that page. You want to have what you do with the right to acquire and what they need to bring to the party, so this could be new geographies, new sectors, related offerings. You got a reason to sell and it's not just because we want to get some money. The final thing is stability. So be really what about those? About that, anything you're in your business, it could cause a calamity. I'm your key micro challenges of things like my dependency. Talk about all reliance on particular team members, either from a skill set or client relationship point of view. If you're deep into semiotics and you got one person that's ahead of semiotics and the only person is there and if they departed you have a problem, then that's something to be aware of. But you know pandemic through certain agency offerings and more recent others in the scenario, and there's been lots of learnings of the result apart.
Speaker 1:Thank you to a brilliant summary which I should encourage all the agencies I'm involved into to absorb. What was the learnings out of the pandemic that you just referenced?
Speaker 2:Well, I guess it's kind of like certain things within. I think it was top of my head now because it's kind of when we look to the pandemic and what happened there, there was certain must a certain agency offerings I'm talking the broader picture of the type of business. This isn't necessary research agencies, although quite a few research clients of ours did find their clients turning off the tap, so some of the people talking to you, particularly in the states, just went absolutely quiet. I think there was a bit of a cut back on that to begin with and some of this bounce back subsequently. But I'm talking about particular areas of marketing the client. We had an experiential, for example, a client that the relied on a lot of outdoor contact with people, took an absolute battery and that that hit research agencies to a degree because you no longer questioning people on the street. You know if you, if you got like loads of Customer satisfaction trackers or stuff like that going on, the require you to be outside of stores asking questions, that wasn't going to happen.
Speaker 2:The experiential business is anything in that kind of space events. They'll took a proper battery and what came out of the pandemic is people have pivoted the way they do things. You know a lot of research on this online anyway, but probably more so. People do a lot more sort of interviews from their bedrooms and stuff on video in the massive learning house. The pandemic was used to video, but now we're sitting here on zoom doing doing a call. All of our calls with clients first potential calls are all done on video pre pandemic we didn't do it because we're all just embarrassed or just didn't feel good being on video, right, it just felt uncomfortable. But now it's natural and it's changed the way we do business. But yeah, a lot of those businesses have done things differently to experiential. A lot of it's online now, in class we had in that space that took a battery have actually come back better and stronger to be fair and bigger as a result.
Speaker 1:Looking at various trends that have been hot over recent years and you know there could be a whole, the whole range of them, you know could be performance marketing versus up a funnel, sars web three, which no one's talking about now, it seems, any more. Yeah, generative AI, what's hot now, what's catching by his attention? What are you, what are the must have, even?
Speaker 2:I'll say we're still in the world of data and tech. People still love data and tech is interesting, but we don't really haven't really seen anyone that's properly harnessing that. I mean, you know it's not going away. I mean, the hype site is not a hype cycle of people that actually put today's global AI conference Certainly there for a reason, because it is a bit of a worry. I think what has been a lot of press about AI and a lot of talk, we're actually waiting to see how agencies using it to advantage whilst mitigating the risks of eating their fees. So, yeah, it's particularly looking at market research, how people doing that, because you can use it for a lot of simulation. So we spoke with a PD firm this week and they're using it to simulate investment performance and decision making Based on all sorts of variables and macroeconomic scenarios. They're using it to plug all these different things in looking at an investment they're about to make and saying what will be the critical points on that. And they can do it far quicker and more depth. And analysts plugging numbers into spreadsheets is just instantaneous. So, and you know, we know, clients in the market research base are investing quite heavily in understanding it. There's a danger of being a bit of a race at a bottom in terms of business is using it just to make productivity games and how can we cut corners, which is great for right, but smart agencies are actually working out what they charge for.
Speaker 2:That can't be currently mimicked by AI, but that whole area at the moment, I think it's gonna be. It's gonna be big. I mean, what free is still there? It hasn't gone away, but it's kind of been swept aside in the sort of narrative because of the whole idea. What's been going on, particularly how fast it's accelerating recent months. Other areas are really hot at the moment. I'd say a health care med comes, medical communications, lifestyle, yeah, that sort of area. We did four transactions last year, the other four in that space, all of which have multiple buyers across trade and PE going for them and that's a really interesting area. So if you're in research and insight In the health care space, that can be a really good place to be right now, because that's what the end of the virus looking for and a lot of these bigger med commerce businesses don't necessarily have that depth. What's inside within health care? Um, so we did transactions by health, which is in Boston, as another one knows, you know, hotly contested.
Speaker 1:So that was healthcare research and that area I think in research is yeah it's pretty key yeah, it's not an area I know very well, but I do know some businesses that seem to do very well within that health care area. So I wanted to touch on PE versus strategic, because they used to be, a sense, the mark on the world. Tell me, if I'm wrong, that PE wasn't that interested in the mark on the world for whatever reasons, and that seems to have changed. So would you agree with Adam? What? If so, why is that?
Speaker 2:Yeah, I mean it's changed really in the last three years. I was actually really ramped up and for a long time P didn't really understand agencies, particularly creative. So that's about research, I'd say. But they were bundler in with the whole mark on sphere, which we talked about earlier, but I couldn't really. They didn't really understand it or how they could value creative. So, yeah, basically didn't understand the crowns and we saw a lot of car crashes in the early days, the P firms being enamored with the glamour of the marketing world and the sex in the Soviet, then getting cross when they didn't see you consistent year-on-year growth of things that invested in. And, yeah, we were brought into a couple of things to help rebase the equity between the management team and the PE, because they're just going in different directions.
Speaker 2:Yeah, the problem is you do a PE deal. If you've ramped it up with debt and you've got debt at a certain coupon that you're trying to repay and your profits equate to that interest coupon, you become a thing called a zombie because you can't buy anything, you can't hire anybody, you're just wondering about paying the PE firms. That's not great, but then sort of things became a lot more of this is on a talk about early days and about 2010s a long time ago, but then things became a lot more about marketing, roi and performance and numbers and P Understand numbers. That became a lot easier for them to get into this space when everything became about Measurability and accountability and it was more data driven. That said, in recent years has been even more sophistication within PE firms in their understanding of the nuances of marketing, and agencies themselves have become smarter too. So you know, the smart agencies are much better commercially. They're better managed, their metrics more transparent. The whole industry has become wiser and you're seeing the sort of Buy and build groups P backed groups now that are doing pretty well.
Speaker 2:So you've got people like sideshow, you know, backed by waterland. You know that's a pace and points. You know they bought a great business there. They've been built up by another Tony. We were bought for agencies put them together and turned it into something really clever and waterland of back that to go on to Do other things and they're in the states buying stuff at the moment.
Speaker 2:If you look at other things funny up waterland have done. They did IMC, which is integrated medical medical med comms business. We sold indigo into that, which is a compliance med comms specialist and that's flying along as well. So that's been rebranded Cyrus. The are seeing quite LDC bought CTI. They've been investing in that. There's quite a lot of these buy and build Mobius as another one. So we'll come into headmines of some of the things we did, the boundary, which we sold into Mobius.
Speaker 2:There's a lot of this happening and P? E Are actually looking at market research and quite a lot of depth as well. But I'm looking for bigger players. They're looking for platforms. I'm talking, you know, minimum 2 million ebit, preferably 4 to 5 million ebit as a platform that they can build on. But really that's where the money is.
Speaker 2:I mean, you know I was quoted in the drum last week, was a little bit vociferous about Marketing services, companies bloundering about a name that can't afford to buy and a thing. And P needs to come in, take them off the market, invest in it properly with a strategy and do something different. So but yeah, but that's where it is. I think you know he understand it. They're a mixed bag. They can be excellent bedfellows and they can be quite tricky. My business we did around the other back by 3. I wouldn't do anything at this. That's sort of level anymore. I just not doing it. But they were great because they're completely benign. They let me crack on with it. And you know, when we had the dark days between 2001 2005, I think they got a little bit more tricky, but that's understandable, you know. But we paid all that debt. They were fine. But other P firms can be a bit Repetious. You need to be quite careful as to who you go to.
Speaker 1:Yeah, good advice as a whole and interesting. Going back to the insights world, in the point that you make that P is numbers based and, yes, I mean putting to one side call against quantum, all the rest of it a lot of insight firms Actually are numbers based to. Yeah, and I think some of the conversations we've had in the past is that you can work with insight birds to actually show a greater degree of projectability and market share and Cadence around what they're doing. Then they think they may actually have. So I could, I could see why. It's why it's very attractive. Final question that was a quick fire round and this is an unfair one. I can ask you to pull out your crystal ball, but he. So what's going on in the market at the moment? Where's it going to go, all that type of thing?
Speaker 2:Right. Okay, if you'd asked me this question about Four weeks ago, I would have been slightly more positive than I am now more glass, half all kind of guy. That's just why I am. I think this this year the markets taking a bit of a battering. First, we still got the Ukraine war tumbling along, which was quite a lot of people, a lot of worry. Previously.
Speaker 2:Interest rate hike, inflation has been a problem and that's particularly linked to PE type deals because they fund a lot of their stuff with debt. So that kind of means you've got to be driving bigger margins in order to cover that debt and that's an issue especially for companies that have got debt on board anyway that's being refinanced at the moment because it's quite hard. I think the Israeli war has been the thing that's probably slowed everything right now. So the brakes on Tokyo, and you know we've got transactions going through and great businesses will always sell. So I don't think, yeah, but it's become a lot more about being being that niche thing that people definitely want or being sizable. Yeah, you've got to be able to decent size and therefore, so I said something that's bigger isn't better. Better is better, right, but as a perception at the bigger you are, the more Sort of safe and stable you are.
Speaker 2:But, yeah, we go through cycles, you know. You go right back to all the years. There's always something there's like the rise of ISIS that worried everybody as a world gonna come to a halt. Through to Trumpism, through to Brexit, through to Iran crisis, through to potential Chinese economy. There's always something that causes a problem and, yeah, we just say conditions always perfect to just crack on. You've got to rise above all of it, because we're never gonna get back to a Status quo, which is normal. There's gonna be something every year and it's just a load of cacophony and the world just has to move on. You can't stand still.
Speaker 2:So, but come back to a question when do I think it's gonna be? I think towards the end of this year. It's gonna be a bit slow. It generally is around December anyway, because people aren't really doing transactions then. But I'd like to think that come January, february, things to start picking up again, much as they did in pandemic. Yeah, because I, the world, ground to a halt in. Yeah, in March 2020, yeah, we'd stop charging all our clients with tainers. We just said it's not, we're not working. We are working for you, but we don't know whether the market is. It doesn't feel fair taking a monthly fee from you. If this goes away, we just stop charging. But when it all came back in August, september, yeah, everyone was back on full throttle and good will with gender from that was amazing. And 2021, I think we did 150 million pounds worth of transactions, which is the biggest year we've ever done in terms of, you know, running transactions through is.
Speaker 1:It's hard to predict. Yeah, and as you say, what? When you get slowdowns of this world, by which I mean the M&A, an investment world, to some extent you also get pent up demand, I mean the influence of interest rates, not withstanding. Yeah, yeah, but again, turn conscious of time and I want to do a quick fire out. If that's all right, I'll just ask a question and then you Give me an answer. You don't seem like a mad.
Speaker 2:You've made many mistakes, but oh, I've got a whole bag of mistakes that I have my health, our clients with, to stop them dropping the falling knife.
Speaker 1:However, what would you say is the biggest good mistake you've ever made, by by which I mean one that you know you're kind of glad you made in retrospect, or was a good learning opportunity?
Speaker 2:Oh, there's a few of those. Actually, we'll be good one, good one. Okay, I got involved in the acquisition of a New York digital agency back in 2000. And when we should have passed it up early doors, it was when the whole dot com boom thing was still going along and everyone thought we had to get a digital agency for our business. And so we're going to buy the stink. We did quite a lot of DD, got the additional funding in from our backers, so we got three eyes to stump up three million.
Speaker 2:But then, just before closing the deal, I decided to walk away, or something didn't feel right. I literally woke up in the morning, said to my wife I'm not doing this. There's something. I'm just not comfortable. It wasn't making much profit. It was all on revenue. Things are today and I wasn't sure when we're going to see the payback to be fair, and in a P backed business you need to have payback. You got to be getting the cash flow through in order to cover off the debt and the interest. So I walked away from it and it caused a hell of a ruckus.
Speaker 2:So it wasn't really a mistake as mistake getting involved in the first place and putting six months of effort in and upsetting the founders of that business. Well, we offered them a much reduced price on the basis that they would get a load of equity instead, performance equity will. That would mean they'll get twice as much value to that business and they would have got otherwise and end up owning a big chunk of our group. But they walked away. But that agency went back straight after 9 11. So if we had bought it it would have taken us down with it. So it went bus literally nine months after we talking to them. So that was, that was probably the biggest good mistake. So I kind of, you know, spend a lot of time, money on that deal and then didn't do it. But it was the right thing to do.
Speaker 1:It's interesting because not only did you follow your guards, but you were also skeptical about revenue multiples, which is also a different conversation.
Speaker 2:Yeah, that's a different conversation for another day. I mean, I think in fast growth businesses where you're adding staff ahead of revenue, but you've actually concede a pipeline. That's really important and in this we were just getting completely carried away with the whole thing because our clients wanted us to have an office in New York and it's just represented a quick and easy way to get into it.
Speaker 1:Final, couple of questions. What's your favorite book or recent book could be a movie piece of media, anything like that.
Speaker 2:Why I always look at what it's like to ask about favorite book and it's always I want to be right. I have to have you know, because I saw this question in Sunday Times the other day on some interview and it's anxious people by Frederick Batman there's the same guy that wrote a guy with a man called O and the second coming by John Miven. Both of those books look at people's inner personalities, what makes them tick, and sort of insecurities and all sorts of other things in a very humorous and irreverent way. If you haven't read them, read them. The second coming is brilliant and I'm not a religious person at all, but it's all about Jesus coming back as a rock star and American Idol and what happens and how human behavior hasn't really changed, but it's very sunny, very irreverent.
Speaker 1:Those are fascinating. When I ask people this question, I say I'll add them to the list, and I do, and then I almost never read them. But those two I actually I may well do they are brilliant anxious people.
Speaker 2:They put it on Netflix but it was rubbish as a series of work. But the book is great. It's about a bank heist that goes wrong. It's a small tick that happens in the opening paragraphs of the book and what goes wrong and there are nine different characters involved in the whole thing. It's very cleverly written, maybe laugh and really resonated. But the second coming is brilliant, as long as you don't mind a lot of foul language and everything else. But John Miven is a brilliant writer.
Speaker 1:Really funny. As you know, Tony, I only like foul language. However, that's a different subject.
Speaker 2:Get the second coming. You'll laugh in the minute you start.
Speaker 1:So final question, sorry if it's a little bit of a cheeky one, but what would your wife say are your best and worst qualities?
Speaker 2:Right, all sorts of best qualities. Getting stuff done around the house, yeah, do stuff with kids, and that sort of stuff. I'm always doing things, you know so, and I love property refurbishment DIY. I mean, kevin McLeod stole my get up and my looks, so I passed it. This leads to the worst quality. But I think also which is because I'm always finding something to do and always feeling about things I kind of never have time to do other nice things, like going to walks with my wife walking the dog around the park but he's really a world and decrepit now, so we're going to get out and do that very much or taking out for lunch and stuff like that. So I'd say those are probably my biggest thing.
Speaker 1:Well, Tony, it sounds like you're busy and it's clearly working. You seem in very good shape. Thanks so much for doing this.
Speaker 2:Pleasure. Thank you for asking me. I feel very honored to have been asked to do this. I hope it's been helpful.
Speaker 1:Very much so, and hopefully we'll be able to catch up in person soon.
Speaker 2:Definitely over a beer and read those books. They're very good.
Speaker 1:So much funding that interview with Tony and for the first time in a while, I've actually started reading one of the book recommendations I've been given. It's really good, although not necessarily to everyone's tastes. We have more to come in the next few weeks with Tina Wilson, one of Nielsen's most senior female execs. She's talking about her journey in the media measurement space and Jamie in Brazil, entrepreneur excellence in this area. He was the founder and CEO of Decipher and then focus vision, executive chair of HubEx, now chief revenue officer at Bolster Pop Me and a host of other great endeavors. They're both great interviews too. That's again for Tony for this interview, insight platforms for their support, to brighter for sponsoring and to you for listening. See you next time.
