BOTW: Planning to fail in media acquisitions; cooking while baked; The big Accenture deal that slipped by
Welcome to Best of the Week, written on a gorgeous Saturday morning at beautiful Sisters Beach, Tasmania.
Happy Dewey Decimal System Day, library lovers.
Today’s writing soundtrack: John Coltrane - A Love Supreme.
The end of year update on Unmade’s progress, which we published yesterday, certainly landed with a splash. If you happened to miss it, you can read it here…
It prompted a lovely day of supportive calls, texts and emails. It felt like Unmade has found a community of supporters.
It also triggered some new sign ups for our paid membership tier. If you were among those, thank you for your support. Until Christmas, we’re offering a big discount, taking the usual price down from $650 to $338.
And I already have an additional update for those who read about our fraud. I had a call from ANZ a couple of hours after publishing the piece. They say they will reimburse the missing funds. It looks like the orphans will receive their Christmas turkey after all.
Today: Bungled acquisitions, campaign of the week and Accenture’s local $130m deal.
I have a hunch - but not the data to back it up - that when it comes to acquisitions, the failure rate is higher in the media sector.
On Wednesday, Crikey published the inside story of the decline of youth brand Junkee since it was sold by Ooh Media last year.
It came a day after shares in The Market Herald resumed trading on the ASX and immediately fell by 10%. The market was digesting news that TMH now has until March 31 to find $60.1m to complete the purchase of Gumtree, Carsguide and Autotrader, while the board goes to war over the future of suspended founder Jag Sanger.
We’ll start with Junkee.
In some media deals, the purchaser genuinely buys a business, in others, they’re just buying the brand. It’s sensible for the buyer to be clear from the outset which one they’re doing.
On the two occasions Junkee has changed hands, it’s been through one of each.
In 2016, out of home company Ooh Media bought Junkee Media from its founders on a $13m valuation.
Last December, Ooh sold Junkee to RACAT Group for $2.5m.
The first time round, Ooh was buying the business, including the know how of how Junkee did business. Junkee understood youth marketing and was a leader in native advertising. As an old school outdoor player in a rapidly digitising environment, Ooh Media wanted to understand the content game.
On that measure, it succeeded. Former Junkee CEO Neil Ackland is now Ooh’s chief content, marketing and creative officer. He leads POLY which is the company’s “creative and innovation hub”, designed to squeeze bigger briefs and budgets out of clients.
The Junkee purchase helped Ooh’s sales offering become more three dimensional. Ooh may have then sold Junkee, but it kept the best bits of Junkee Media, even if it couldn’t say so publicly at the time..
The second time round, whether it understood it or not, RACAT was simply buying the Junkee masthead.
The risk of that type of purchase is that although there are exceptions, media brands often have a shorter life cycle than companies. Even before being disrupted by digital, magazine mastheads rose and fell based on changing consumer tastes. TV shows have always come and gone. Junkee may simply have already had its moment.
And that’s before you even allow for the quality of planning by the buyer. You’d be surprised how often there isn’t actually a plan on how to integrate a media purchase into the existing business.
For instance, if News Corp had a detailed plan for the future of (the now defunct) Business Spectator when it purchased it for just under $30m in 2012, it never executed it.
For RACAT Group, the plan appeared to be to bring in someone who understood youth publishing. While it wasn’t in the original announcement of the Junkee purchase from Ooh Media, the deal was actually a joint investment alongside former Betoota Advocate investor Piers Grove. That only emerged yesterday, when the Sydney Morning Herald reported Grove’s exit.
Crikey’s investigation is a classic story of a bungled acquisition (“employees say they cried every day”). Over the last year, Junkee lost its purpose and its direction while RACAT dithered on strategy, and employees waited to hear the plan.
The Junkee saga has that in common with The Market Herald’s purchase of Gumtree, Carsguide and Autotrader.
Even without the boardroom war between founder Jag Sanger and shareholder Gavin Argyle, it would have been a challenging integration. How to take a group of people from a fading classifieds site with a missionary zeal around the circular economy, and create an audience engine around the new TMH One network?
The meeting where Argyle gave his baffling address to the new employees demonstrated the planning gap. While lecturing them that if you fail to plan, you plan to fail, the staff simply wanted to know who their boss would be, and what structure they’d be working under. It looked like there was no plan.
Sanger probably had one, but he faces an uphill battle over the next few weeks to regain control via the forthcoming shareholder vote.
No wonder staff compared it to the Elon Musk experience. Since buying Twitter for $44bn, it’s become increasingly clear that Musk had no plan ahead of time and is now, chaotically, making it up as he goes along.
Fail to plan, plan to fail.
Campaign of the Week: Stay off the Stove
In an experiment over the next few editions (which may become permanent if readers find it useful), we’re teaming up with our friends at Little Black Book Online to highlight the most interesting marketing campaign of the week.
LBB Australia editor Delmar Terblanche writes:
One of the greatest fire hazards is cooking when you're in no fit state to do so. When you're cooked, in other words. So, agency Motion Sickness teamed up with Fire & Emergency New Zealand to create a cookbook showcasing recipes that are safe to make when you've got those... late night cravings. We loved this gentler, funnier approach to safety, and we especially loved the videos they produced of cooked Kiwis trying their best to follow the recipes.”
The big Accenture deal you may have missed
Accenture made quite a big acquisition this month, which hasn’t received as much attention as one might have expected.
The Sydney-headquartered research house Fiftyfive5 has become part of Accenture Song. That puts Fiftyfive5 in the same stable locally as The Monkeys, and Droga5 globally.
Although the sale price wasn’t disclosed, it will have been a big number; the Australian Financial Review suggests $130m.
Fiftyfive5 has around 150 staff and Mercury Capital (owner of Are Media) was among the shareholders. If it had been a similar sized creative agency, the news would have had far more impact: remember when Accenture bought The Monkeys five years ago, for what turned out to be $63m.
Fiftyfive5 has completed a couple of circles. CEO (now partner) Mark Sundquist was previously boss of The Leading Edge, which was owned by Photon Group (which later rebranded as Enero after its ASX meltdown). Earlier this year, (perhaps bulking up ahead of the sale) Fiftyfive5 bought The Leading Edge from Enero for $1.3m.
It will be interesting to see how clients and competitor agencies react to Fiftyfive5 becoming part of Accenture. There’ll be a lot more client conflict to manage. Perhaps that’s why they didn’t shout the acquisition from the rooftops.
Unmade Index: A bad week
It was a brutal week for the Unmade Index of ASX-listed media and marketing companies, with a further fall of 0.56% on Friday.
That followed a flat Monday and falls of 2.89% on Tuesday, 2.03% on Wednesday, and 1.84% on Thursday.
The index, which now sits on 655.7 points, is down by 7% on a week ago, and by 34% for the year to date. That’s far worse than the wider ASX All Ords, which fell by 1.3% over the last week and 6.6% for the year to date.
The only Unmade Index stock which went up yesterday was Southern Cross Austereo, which rose by 0.47%. HT&E, owner of the ARN audio company, saw the biggest fall, of 2.94%.
Time to let you go about your Saturday.
An early night beckons for me, ahead of a 6am alarm call tomorrow for England vs France in the World Cup.
And I’ll be back with Abe Udy on Monday for Start the Week.
Have a great weekend.