IgnitionOne to Split From Dentsu In Management-Led Buyout
The company came to Dentsu as part of its 2010 deal to acquire Innovation Interactive, which included IgnitionOne, the audience targeting firm Netmining, and the digital ad agency 360i, part of Dentsu's push to get bigger in the U.S. The company acquired Aegis in a $5 billion deal earlier this year.
As part of the deal, IgnitionOne and Netmining will become an independent, privately-held company, while 360i, which does more traditional agency work, will stay with Dentsu.
IgnitionOne is a one-stop shop for digital marketers that includes buying technology for search, display, mobile and social advertising. The company works with clients across Dentsu and 360i, as well as independently with brands like Nissan and Fiat.
As a unit of Dentsu, the company found itself unable to work with other U.S. agencies, which control the vast majority of budgets in the world's largest ad market, which limited its growth. "IgnitionOne was partially limited by its position as Dentsu's subsidiary and as clients," said Dentsu Network CEO Tim Andree. He added that after the spin, Dentsu will continue to use IgnitionOne's services.
"It is not a case of 'good bye and good luck' – our employees use IgnitionOne globally every day and they will continue to be demanding clients," he said.
The deal unwinds a conflict that often arises when holding companies acquire technology firms -- the tech company is prevented from doing business with other holding companies and the holding company's clients could percieve it was giving preference to tech solutions it owns rather than what's best or most efficient for the marketer.
IgnitionOne also had to compete for engineering talent with competitors that either have a public stock currency, had raised a lot of capital or have a possible IPO on the horizon, like Marin Software, Kenshoo, Criteo and Rocketfuel.
"We will be able to innovate faster as an independent company," said CEO and founder Will Margiloff. "We will also be better able to compete for and retain great talent."
Terms of the deal were not disclosed. Dentsu will retain a minority stake in the company and will have no board seat. The buyout was led by roughtly 20 top IgnitionOne execs and backed by Baltimore-basd venture capital firms ABS Capital Partners and Persimmon Capital Partners. The business is profitable and has in excess of $100 million in revenue per year, 325 employees in offices in New York, Atlanta and London.
Mr. Margiloff will remain CEO. Deric Emry and Ralph Terkowitz of ABS Capital Partners and Robert Tobin of Persimmon Capital Partners will join the board.
Mr. Margiloff sees the marketing world getting more fragmented and complicated, creating the need for a single solution for marketers, rather than many vendors that do one thing well. "What we've been trying to do is integrate these point solutions into a single stack," he said. "We don't think anyone has done that really well for the marketer. For us its about making their life easier through technology."