Droga5 Gets Boost From Investor Henry Silverman and MTV Founder Bob Pittman

The Shop Will Likely Use Funds to Open Office in London

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One of the most-closely watched independent shops in adland, Droga5, has won a major vote of confidence -- and several million dollars in backing --from prominent investors who are trying to help the agency expand while retaining its indie status.

The investment, which was reported earlier today by one of the Wall Street Journal's blogs , was led by a private group headed by investor Henry Silverman, and included media mogul Bob Pittman.

Mr. Silverman is the vice chairman and director at Apollo Global Management, and Mr. Pittman is the CEO of Clear Channel. He was also the co-founder of MTV Networks and the onetime chief operating officer of AOL Time Warner . The two men have teamed up on investments since 1990, when an investor group purchased Six Flags of America, and Mr. Pittman served as CEO and Mr. Silverman as chairman.

DROGA5 (From l.) Founder David Droga, President Sarah Thompson, and CEO Andrew Essex.
DROGA5 (From l.) Founder David Droga, President Sarah Thompson, and CEO Andrew Essex. Credit: Katja Heinemann

The investment is unusual and a bit of an experiment. Mr. Silverman hasn't ever invested in an ad agency, and his interest in adland -- provided this deal proves fruitful -- could be a positive thing. The investment in Droga5 is understood to be between $5 million and $10 million.

The news comes shortly after Ad Age named the agency to its A-List and the company Creativity 's Agency of the Year.

In a statement provided to Ad Age , Mr. Silverman said: "We are delighted to partner with Droga5, the leading creative agency in the world, to help the company advance to the next level."

"We are pleased to partner with such respected investors who can help us achieve our next stage of growth," said Andrew Essex, CEO of Droga5, in the statement.

The funds will be used primarily to do two things: expand the agency's New York office, which has just about 120 staffers, and help Droga5 open its doors in a new market.

Besides New York, Droga5 also has an office in founder David Droga's native Australia. Between that outpost and New York, globally the agency's overall headcount is around 200.

Speaking to Ad Age late last year, Mr. Droga had reiterated his desire to stay independent in the near-term and noted that international expansion was on the horizon. Among possible new markets, he cited India as No. 1 on his list, followed by somewhere in Europe and then Brazil.

Now it seems the agency has its sights set on London instead. It's early days, though, and it could be 2013 before the next office is opened.

But don't expect the agency to follow in the footsteps of competitors like Wieden & Kennedy and Bartle Bogle Hegarty, which have championed the "micro network" model of placing six to eight offices in key regions. That was devised as an alternative to the costly process of opening offices to serve clients in upwards of 100 countries, like many of the big agency networks such as WPP's Ogilvy, Omnicom's BBDO or Interpublic Group of Cos.' McCann, did years ago.

In the digital era, so many physical offices are no longer necessary. Moreover, Mr. Droga is admittedly downright paranoid about the prospect of growing into a franchise, with several offices around the world. The agency so far has been conservative about its growth and is wary of a rapid or widespread expansion that could impact Droga5's culture, and potentially dilute the quality of the creative product.

"There's an interest to open in one or two markets in the next few years and it's predicated on the right people, not just because a client wants us to open there," Mr. Droga had told Ad Age .

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