BotW: Enero woe; Growthops flops; and TikTok clock resets
Welcome to Best of the Week, written at beautiful Sisters Beach, Tasmania, after a week of running around in Sydney and Melbourne. It felt like summer when I set out on Monday morning, and I came home to autumn.
Today: History rhymes as Growthops goes down a second time while Enero falters again; the Unmade Index survives the first onslaught of the Trump crash, but what happens on Monday?; and extra time for a TikTok deal.
Happy International Pillow Fight Day.
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How OBMedia is dragging down Enero
With most stocks on the ASX likely to crash on Monday following last night’s events on global markets, yesterday’s 16% hit on Enero feels a little less dramatic.
The causes are different.
Whereas Donald Trump’s overzealous bullying mechanism may be what is tanking the world’s markets, another OBM pulled down Enero yesterday. The company’s majority stake in OBMedia has been a nightmare for the last two years.
Enero is Australia’s only locally listed agency holding company, with around 650 staff (for now, anyway) and agency brands including BMF, Orchard and Hotwire.
Enero was rebranded from Photon Group in 2012. Photon had been a hubris-powered roll up that came unstuck when the Global Financial Crisis arrived. The switch to Enero signalled a more rational business model and more considered leadership.
The company’s survival and revival was a testament to Jeremy Philips who kept it out of bankruptcy and then Matthew Melhuish (the M in BMF) who doggedly regrew it.
And it is a legacy from the Photon days that is causing most of the damage to Enero at the moment. Photon bought 51% of OBM back in 2006. It was the company’s first US acquisition.
OBM has always lived in one of the grubbiest parts of the tech world, scrabbling down the back of Google’s sofa to look for loose change under the cushions.
The moment the market began to turn against Enero was in August 2023, when the company owned up to investors that OBMedia had been playing in the grubby end of the already grubby arbitrage space. In arbitrage, publishers are paying people like OBMedia to send them audience so they can then serve ads at a higher rate than they paid for the traffic; the advertisers generally don’t know what they’re getting.
OBMedia had “proactively halted” working with certain publishers after it “identified lower-quality traffic among several publishers”. That’s how you say fraud without using the word fraud. Revenue fell from $60m to $36m.
A “strategic review” (read: ‘for sale’ sign) was announced around of Enero’s stake.
Yesterday came more bad news. With no sale on the horizon, OBMedia’s revenue is expected to decline to less than $30m with profit from the unit likely falling by more than half to $9-12m.
The blame for the latest hit was “the recent decision by Google to shift the industry towards its newer Related Search on Content product, de-emphasising its AdSense for Domains monetisation product”.
Think: the ads you see on parked domains that aren’t yet being used. Like I say, back-of-the-sofa stuff.
As a result of the change, OBM is looking to save $7m by cutting staff.
Enero now expects to report a fall in overall revenue for this financial year of more than 10%, with EBITDA profits down by 30 to 40 per cent.
The last time Enero’s share price was this low was more than a decade ago. It’s lost 22% this week, 29% over the last month, and 63% this year.
Growthops no more
Sometimes history really does rhyme.
Just as Photon / Enero faced death, survived, then got in to trouble again, Growthops followed the same pattern this week too.
One difference between the two models was the unfulfilled vision for Growthops to eventually operate as a single business
From the moment the company, which was known as Trimantium Growth Ops back in 2017, began, it smelt a lot like the Photon disaster - raising money through an ASX float, then funding agency purchases through a mixture of cash and shares along with a promise of further tranches for sellers based on future performance.
We said as much on Mumbrella at the time, before being sued and forced to take down our predictions as part of the legal battle. This week we finally republished that analysis.
Our predictions were correct, by the way. The share price started at $1.22 and fell to 5.3 cents by the time it delisted in late 2020.
And then, just like Photon-Enero, Growthops entered a second life which seemed to go better until it didn’t.
It would appear that the next set of managers found a whole new set of mistakes to make. An insolvency note filed with ASIC this week listed 19 Growthops companies that have been placed in voluntary liquidation, including AJF Partnership, JTribe, Voodoo Creative and all the APD businesses.
The liquidators will have much to examine.
We’ll be looking into the saga too. Please drop me a line via tim@unmade.media if you have any background to offer.
TikTok clock resets again
It never felt like this weekend’s deadline for a TikTok ownership deal was for real.
And we woke up this morning to discover that we’re into another 75 days of added time before TikTok’s Chinese owners will be forced to sell.
The imminent deadline did indeed flush out new information though. First that owner ByteDance has been negotiating with the US government. That’s a hint that the Chinese government might allow it to take place.
And even more significantly, the fact that Amazon is a bidder. Within the advertising ecosystem, Amazon has become a giant in retail media and has built huge reach for the advertising tier of its streaming service Prime Video. Owning the world’s most addictive social media platform would supercharge that portfolio. No wonder owner Jeff Bezos has been sucking up to Donald Trump.
Index hex
The Unmade Index withstood the initial shockwave of the Trump slump reasonably well on Friday, only losing 1.7%, which was better than the wider ASX All Ordinaries which lost 2.6%.
However, the worst of the falls in Europe and London occurred after the ASX had closed yesterday, suggesting Monday may be much worse.
Most of the stocks on the Unmade Index fell yesterday. At the top end, Nine lost 2%, while Ooh Media lost 3.7%. Audio players Southern Cross Austereo and ARN Media lost 1.5% and 0.5% respectively.
Seven West Media beat the trend, rising by 3.5%.
Time to leave you to your weekend.
If you’d like a little more from me, last night’s edition of MediaLand, from ABC Radio National, is now available in all the usual podcast places. We discussed news avoidance, the likelihood of another ABC efficiency review if the Coalition wins the election, the Tik Tok sale and the Today Show’s lame April Fool segment.
We’ll be back with more next week.
Have a great weekend.
Toodlepip…
Tim Burrowes
Publisher - Unmade + Mumbrella
tim@unmade.media
