Seoul-based agency group Innocean Worldwide said Thursday that it has bought independent U.S. creative shop David & Goliath, a deal that unites two companies known for their work with South Korean automakers. Innocean valued the deal at up to $71.7 million.
Hyundai Motor Co.-backed Innocean got its start in 2005 as an in-house agency doing media buying for Hyundai and its sister company, Kia Motors Corp. Meanwhile, Los Angeles-based David & Goliath has been creative agency of record for Kia Motors America for 18 years; its other clients include Universal Studios, HBO, Jack in the Box and California Lottery.
Innocean said it bought 100 percent of the shares of David & Goliath, which was founded in 1999 and has about 200 people on staff. Innocean added that it plans to "aggressively expand business in the U.S."
Greg Paull, co-founder and principal of R3, said Innocean is looking at the path of another South Korean agency group, Cheil Worldwide. Cheil started as Samsung's in-house agency and expanded with acquisitions including The Barbarian Group, Iris Worldwide and McKinney.
"Innocean has always aimed to be the 'next Cheil' and build a global footprint around Hyundai," Paull said. "David & Goliath have a long proven history on that client and will prove to be a far better option than a Korean startup in the U.S."
Work from both Innocean and David & Goliath will appear in the Super Bowl next year. Innocean is handling creative work for Hyundai, an NFL sponsor, though there are few specifics, including how many ads will run during the game.
Meanwhile, David & Goliath will do an ad for Kia, which is returning to the Super Bowl for the ninth consecutive year. The agency's comic spot for Kia in last year's Super Bowl featured Melissa McCarthy as an environmentalist who tries to save a whale, a tree and a rhino, with the point being that it would be easier to help the planet if you bought a Kia Niro, a hybrid crossover. The agency is also well known for its Kia work featuring hamsters. Last year, the California agency had about $45 million in gross profit, which is revenues minus creative production costs, according to Innocean.
Innocean had an initial public offering in 2015; the company says this is its first acquisition since then. (South Korean news portal BusinessKorea had reported on the talks between the two companies earlier this week.) Innocean had gross profits of $350 million in 2016, up 20 percent from the previous year.
The agency group expanded to the U.S. in 2009 by opening up shop in Huntington Beach, Calif. In 2015, Innocean announced that it was partnering with U.S. agency giant Horizon to launch a separate standalone media agency called Canvas Worldwide, with Hyundai and Kia as the first clients. Today, Innocean has about 2,000 employees between its headquarters in Seoul and offices in 16 other countries.