Spannerworks, a leading UK search marketing agency, has been acquired by the US digital agency iCrossing in a deal worth “well in excess” of £10 million, the Spannerworks CEO has told E-consultancy in his first interview about the deal.
Congratulations to the Brighton-based firm and its chief executive Arjo Ghosh who owned the vast majority of the company's shares and will continue to head the company which he founded 10 years ago.
The company will continue to operate under the Spannerworks brand name and "aggressively hunt for new talent to branch out across Europe".
Ghosh told us that early reports that he had sold the business for £9.2 million ($18 million) were inaccurate and that the sum was in fact “well in excess of that figure”.
He was unwilling to disclose the terms of the deal and earn-out but said the existing Spannerworks management team would lead the company on its embryonic "global expansion strategy" in partnership with iCrossing.
The deal will help both parties move forward because it will create a more international company which is set to benefit from combined techologies and improved client services, he said.
The acquisition comes less than three months after Spannerworks’ main UK search competitor Bigmouthmedia merged with Global Media in a deal worth almost EU 60 million aimed at creating a global presence.
Ghosh, who has written blog posts for E-consultancy, said that he had received numerous approaches in the last 18 months from global, American and European players. He said that he first spoke to iCrossing about a potential partnership in the middle of last year.
A major attraction of iCrossing was, he said, the US company’s shared interest in social media. Spannerworks, which made around £4 million in revenue in 2006 from clients including HBOS, Best Western Hotels and BT, has developed services using technology which helps companies map the impact of social media on brands.
iCrossing, founded by CEO Jeffrey Herzog, also started out as a search marketing agency but now also offers a range of other services and technologies, including analytics and market research, to clients including 32 of the Fortune 500 companies. It now has annual revenues of more than $30 million.
The American company, whose chairman Richard Rosenblatt was formerly the MySpace chairman, shares Spannerworks’ vision in the social media space and had been moving on “parallel paths” with his company, said Ghosh.
“This is a massive vote of faith in the UK digital sector,” he added. “In the UK we consider ourselves to be 18 months behind the US in the digital industry but we are leading them in some areas.”
According to the official press release: “Spannerworks’s clients will benefit from iCrossing’s cutting-edge search technology, research and consultancy products, and brand monitoring services.
"The company will receive strategic direction and insight from iCrossing’s board of industry heavyweights including iCrossing CEO and founder Jeff Herzog, President and COO Donald Scales, and iCrossing chairman Richard Rosenblatt, former Chairman of the Board at MySpace.
“iCrossing will integrate its services with Spannerworks’ innovative range of search and social media products and services. Spannerworks’ strong content and media practices will enhance iCrossing’s ability to provide its clients, which include The Coca Cola Company, LEGO, and General Motors, with holistic digital marketing solutions.”
Ghosh added: “We set out to partner with a company that understood search and its importance in digital marketing, with a range of products and services to complement our own. iCrossing is the perfect match, and this deal squarely puts Spannerworks ahead of the market.
“From this month forward we will be embarking on a global expansion strategy in partnership with iCrossing, and will be keenly hunting for the best European talent in the industry.”
Apart from Arjo Ghosh, Spannerworks’ commercial director, Ray Richards, and Robin Hislop, one of the company’s founders who has now left the business, were also significant shareholders.
iCrossing has received a total of $50 million in financial backing, including $18 million in its latest round of funding. It's this $18 million figure which has apparently wrongly been reported as the cost of the Spannerworks acquisition. iCrossing also bought the US search agency Newgate Internet in December 2006 and is said to be planning further acquisitions.
The British digital marketing landscape is changing rapidly, with UK agencies seemingly as attractive to American businessmen as its Premiership football teams. Who will be snapped up next?
Further Reading: E-consultancy Search Engine Marketing Buyers’ Guide 2006.