2014 sees the Indian social media space getting its due.
The five-year old market has already seen four acquisitions in the first quarter itself. In January Publicis Groupe acquiring Law & Kenneth, the New Delhi-based independent agency led by adman Praveen Kenneth. In February, Bangalore based digital agency 22Feet got acquired by DDB Mudra and Odigma was acquired for $5 million (Rs. 32 crore), primarily in stock and cash by leading e-commerce firm from Ahmedabad, Infibeam.
The end of the quarter brought another big news to cheer for - Mumbai based Social Wavelength (SW) India’s largest social media agency got acquired by JWT. While there was no news on the deal value but according to ET the acquisition deal could have been not more than Rs. 40 crores.
Leaving aside the value, the acquisition is nothing less than a fairy tale story for a five-year old startup that was founded by two very close college time friends – Sanjay Mehta and Hareesh Tibrewala. Interestingly, both the buddies also happen to have started Homeindia Online Services for more than a decade, which eventually got sold too.
Building up Social Wavelength
After Homeindia, the buddies got back into the employee mode and worked at different scales in different organizations. Sanjay was still close to the Internet business in the country, as he took over the position of COO at an 800-person team at Compare Infobase Ltd. While working at Compare, he could sense and observe how the Internet space in the West was changing with the advent of social media, and with the entrepreneurial streak in him he had a gut feeling that it will soon hit Indian markets.
During his venture at Compare Infobase, Sanjay had been stationed mostly in Delhi and this was the time when the early vision of building a services based business saw its genesis. Sanjay credits a lot to the book Groundswell that he had happened to read during the time; the learnings from the book became stepping stones for building the vision for Social Wavelength (SW).
“Networks were growing and it was my belief that people would eventually be a part of these growing social networks. Recognizing this, the vision developed that tomorrow if a business has to distinguish itself from the rest of its competitors, it may need to participate in social media to connect with its users.
From SMEs to large organizations, everybody will have the requirement but most of them were alien because all of them came from the mass communication era. So now here was a market which needed help from an agency or consultants or specialists,” adds Sanjay while remembering the early days before venturing into SW.
Sensing the demand, in 2009, Sanjay once again wore the hat of an entrepreneur along with Hareesh and founded SW to offer social media marketing services to Indian and global clients. The experienced duo was then joined by a young enthusiast Mihir Karkare who happens to be the third co-founder and VP at SW.
The space was new, the networks were developing so SW started from the lower end of the market with the SMEs or businesses who were willing to take the risk and give opportunity to engage. With time the agency kept moving up the value chain in the market and got hold of bigger brands who had a large market size and could also justify the resources of SW.
In five years time, the agency became one of the largest social media agencies in the country with over 150 plus strength, pan India presence and a sizable profile of rich clients.
Early acquisition discussions before JWT
Acquisition talks began brewing from the second year of operations at SW, states Sanjay. “One of the larger agencies had approached us, gave us a term sheet but things didn’t fall in place. Starting our second venture was a boon since our previous entrepreneurial experience came handy when discussions like this would surface. We were open to talk but we had a clear thought process that we would go ahead when both visions would gel to an extent,” Sanjay adds while highlighting that the agency never had a mandate to find a buyer.
“The agency from day one was built with a vision to serve a need of the market and not to get acquired,” shares Sanjay. It was a business that was cash positive and as co-founders we would have been quite happy to be retired with it, Hareesh adds.
The initial approaches that came forward to the co-founders were via mutual connections. “These conversations kept on happening at events, dinner tables but since it was quite early days for the market and the agency, we kept our focus on servicing the customers in a better manner,” adds Mihir.
SW says yes to JWT
In the early days, business came to SW via bigger agencies and so it had partnered with a quite a few well-known main line agencies. This was the time when SW was a white label partner with almost every agency in the industry which included names like Starcom, Tribal among others. In this list, JWT was one of the agency that SW was having a healthy work relationship with.
“We had worked with JWT in quite a few projects and there was a certain comfort level with people across the board. There are a lot of agencies who are looking for buy vs build and when JWT expressed the desire things started to fall in shape,” adds Sanjay on the early round of talks with JWT that started a year back.
The comfort level and the chemistry that SW had with JWT for some time were some of the early deciding factors for SW. “You feel that you are given respect and credit for your work expertise, irrespective of the factor that JWT is a very large organization is a very good feel. After that all the conversations that happened had a level of fairness to everything,” adds Sanjay on what made the co-founders go ahead with JWT
From Hareesh’s point of view, “JWT is one of the largest ad agency and SW is also one of the largest social media agency in India so the confluence of digital and main line had to happen at some point of time and this was the right time to make it happen.”
While Hareesh is of the opinion that the market timing is not important for entrepreneurs but meeting of heart is important, Mihir thinks that an acquisition is like getting married. He further adds that, “WPP and JWT both gave us the comfort and made us believe that we are the right people to get married to. So apart from the pedigree, we knew that these were the people who we thought were the best in the industry to collaborate with.”
JWT acquires SW keeping talent, customers and mobile in mind
On the other side, JWT, a part of WPP, had already acquired Hungama, an agency in the same space. Attributing the latest acquisition to the enormous digital appetite of JWT, Colvyn Harris, CEO JWT, South Asia says “We have acquired Mindset, Encompass, Hungama and now we have acquired SW. Our digital vision for JWT is enormous and SW is an agency in the social space with metrics and measurement.”
Recollecting the early days of conversations, Colvyn who was running quite busy had given a short notice to the co-founders for an hour-long meeting in Delhi, and not in Mumbai where the Co-founders were actually based at.
“I had asked them if we could meet in Delhi for an hour and the next thing they did was they found the earliest fight and were with me in Delhi,” he points out while sharing that he was blown away with what SW was doing at that point of time.
This led to the beginning of talks for the acquisition. For JWT the acquisition was more to do with the skill capabilities of the agency and client list. “What we found in all the three co-founders was that all are a fabulous set of people to work with,” shares Colvyn.
This led to a long round of processes and discussions which meant going through the business processes, future vision, growth process, among other things. Sanjay states here that these discussions happened since JWT wanted to evaluate the independent thought process of SW, vision and mission of the agency before the deal takes place.
With a marriage between JWT and SW confirmed, the legal process and the due diligence process started to happen since JWT which comes under WPP, requires a lot of procedures and checks before the deal is signed off and made public.
Finally the deal was made public on 27th March, 2014 after WPP informed the London Stock Exchange about the acquisition.
Road ahead with JWT
The transition phase is still on but according to Sanjay nothing much changes for SW after the deal except that it is now a part of JWT. “We are going to work in the same space from the same locations as we have done for the last five years. We are going to work as independent as we were doing before and there are no management changes.”
However, the things that change are for the betterment of the global growth of SW. Going further the agency gets an access to JWT’s positive professional processes along with access to the clients of JWT. “I believe there is an ample opportunity in the industry; we were growing at a good rate and we would have grown at a certain pace but the JWT relationship will enable us to grow at a much faster rate,” add both Hareesh and Sanjay, who are happy with how the deal has structured allowing them to be entrepreneurs, and remain quite excited about the market with no intention to slow down.
Sanjay further states that as an agency they had two choices: either work as a boutique agency, keep growing at a certain pace and be happy or get acquired by a player for the expertise you sell. SW chose the latter to reach its goals faster and get an exposure to the global learnings brought by JWT.
For JWT the ongoing transition will help to better understand the talent base to align with future goals. “We are trying to understand where we should focus and de-focus which is going to take time, and is always centered around clients, skills and capabilities,” adds Colvyn. He also shares that mobile and analytics is where JWT wants to grow in the future and it is one of the factors that led to the acquisition.
The deal is a validation to the Indian social media industry and like Mihir, who had joined SW after 18 months of college, thinks that his belief in SW being backed by a huge industry player like JWT, is a commendable achievement. “In a sense this deal personally has provided a validation to whatever I had thought half a decade back and that’s a big empowerment for me,” shares an excited Mihir who is all guns after the new deal.
The Indian social media space is certainly set to witness more such validation stories.