Dentsu Acquires Digital Indie Firstborn
CEO Tim Andree Calls New Purchase 'Completely Complementary' to Japanese Giant's 360i
NEW YORK (AdAge.com) -- Dentsu West, the U.S. arm of the Japanese holding company giant, has acquired 65-person indie digital shop Firstborn.
The New York-based digital agency is the latest in Dentsu's buying spree under Tim Andree, CEO of Dentsu West. Terms of the Firstborn deal, which has been in the works since last summer, were not disclosed. Firstborn will maintain its name and clients, and says its trio of senior leaders, CEO Michael Ferdman, President Dan LaCivita and Chief Creative JoonYong Park, will all stay onboard at the shop.
Firstborn's revenue was an estimated $12 million to $13 million in 2010, up more than 30% from 2009, the year it was named to Ad Age's A-List. It counts PepsiCo's Sobe, Wrigley and Aflac as clients.
In keeping with Mr. Andree's usual form, no investment bankers were involved in the purchase; the sole matchmaker was Bryan Wiener, CEO of 360i, the digital agency Dentsu acquired nearly a year ago to the date. He introduced Mr. Ferdman and Mr. Andree over dinner just after Labor Day, at Tribeca Grill in Manhattan.
The two digital-agency CEOs have been friends for years, and prior to that dinner, Mr. Ferdman asked Mr. Wiener: "For real, tell me, what's changed?" This was not the first union Mr. Ferdman had considered; other media and holding companies have tried to court Firstborn, but he had always turned them away. "None of [ 360i's] key people are gone and they're a bigger company than we are," he said. "Everyone knows horror stories of what can happen [with acquisitions], and all I've seen at Bryan's company is positive." With 25% revenue growth one year after the acquisition, 360i was recently named to Ad Age's Agency A-List. McGarryBowen, another major Dentsu acquisition before that, has also grown substantially since its sale and was named Ad Age Agency of the Year for 2009 and again to the Agency A-List in 2010.
While Firstborn is the second digital agency to join Dentsu West, Mr. Andree insists there's no overlap between 360i and its new sibling. He calls the agencies "completely complementary," since Firstborn brings new services to the network, such as 3D animation and web development. "We're not adding competitors," he said. "We're adding new talent and capabilities."
One major point of difference is that, where most agencies use the influx of cash to set up new offices around the globe, Firstborn isn't looking to expand beyond its single, New York office. Mr. Ferdman is insistent on keeping all staffers within the same office in the hopes of keeping the agency's culture intact.
However, the acquisition could potentially raise conflicts with Firstborn's existing agency clients -- 25% of revenue comes from production work for other agencies. For example, the agency has a long-standing relationship with WPP's Team Detroit for car websites and customization tools. Another consideration will be the fact Firstborn counts PepsiCo a client, while 360i works with Coca-Cola, but Mr. Andree there will be sufficient firewalls put in place to safeguard those relationships.
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Contributing: Rupal Parekh