A Good Time to be Smart (and in our business)
So I've joked a couple times in the last 9 months about suddenly feeling "valuable" again.
And I've shared my projections on valuations for the mid-sized independent (talent-driven) interactive shops.
It seems that now we're seeing measurable confirmation of both these comments.
If you've been working in "interactive" or "digital" for more than 5 years and have a somewhat senior role - you should be smiling when you think about your career growth options.
If you've been working in "interactive" or "digital for more than 10 years and have a senior/executive role - congratulations, you just won the lottery.
The very large holding companies and the large agencies are getting desperate - and they're discovering just how rare experienced talent is. They're realizing how far behind they are - and how at risk they are.
Brilliant twisted logic from Tom Carroll, Worldwide President TBWA:
"I don't think we're behind, but we're not ahead. So therefore we're behind. We're probably like everybody else, so we've got to work twice as hard to get ahead."And, as noted before - this shift is NOT being driven by the Agencies. In fact, the desperation comes from the fact that the Agencies are falling behind on this. The shift is being driven by Consumers - and demanded by Brands... and the Agencies are in last place.
Agencies have spent the last 40 years getting fat off a control-relationship that put them in a leadership role, with the Brands in a secondary role and the Consumer a passive tertiary recipient. The whole package has been flipped on its head... and we're getting to see the first hints as to which firms are going to adapt (and which are going to go the way of the cigarette TV spot.
Of course... the proven model for Agencies (and even more so for the big holding companies) when faced with a challenge like this is to acquire.
"We are building creative capability organically. And to accelerate this we're interested in acquiring proven creative digital talent startups because client demand is growing fast and we want to be ahead." -- Kevin Richards, CEO Worldwide - SaatchiWhat does this mean?
Well... as predicted -- if you own an independent mid-sized digital or interactive firm with a concentration of talent and good clients... time to start thinking about your future. Do you want to continue to do whatever you want to do? Or do you want to get rich? Is it about the work and the freedom -- or is it about the ducats? 'Cause right now, the traditional "1.2x to 2x trailing 12 months' revenues" valuation model for your firm is not relevant.
This is one of those weird moments in time (read "1999 all over again") where the base financial logic behind a services business valuation is and can be ignored. Acquisitions are not being done for financial reasons - but rather for competitive reasons --- and out of desperation.
How long will this last?
I'm projecting a continued sense of desperation and intense competition and even feeding frenzy for the next 6 to 9 months.
So to sum up...
- If you're talented and experienced and senior in the space... you're very valuable (right now and at this moment in time).
- If you're an owner or major shareholder or investor in a mid-sized firm with a concentration of talent and good clients in this space... I'd suggest an immediate discussion about your goals and a good talk to a lawyer about potential acquisition negotiations.
- If you're an owner or major shareholder or investor in a mid-sized firm without a concentration of talent... Time to raid the small shops in your area. Spend whatever it takes (fiscal discipline is pointless right now). Get their talent.
- If you're an owner of a small firm with a concentration of talent and good clients... you need to immediately consider merging with one or two other small shops or you're going to start losing your talent quickly (you cannot compete with either the mid-sized shops or the big Agencies and holding companies).
- If you're talented and experienced and senior and are an owner or major shareholder or investor in a mid-sized firm with a concentration of talent... feel free to drop me a line for suggestions on who you should have manage your riches come 12 months from now.