It must be something in my stars this week. Not one, but two predictions have come to pass. Less remarked than Omnicom putting its hand up to a $100m deal with Communispace is maverick agency group Anomaly – skippered by UK advertising legend Carl Johnson – selling a 60% stake to agency aggregator MDC Partners.
Who? Take my word for it, MDC is far better known over the water than it is here (which is barely at all, so far as I can see). Try: the NASDAQ-quoted company that owns Crispin Porter & Bogusky. There, now you dimly recall it. It was set up, or rather reinvented, by Canadian financial whizzkid Miles Nadal – its chairman and chief executive – in 2004 and, if its website is to be believed, now has over 35 holdings. MDC is rapidly expanding: it spent $125m last year on a series of acquisitions. It is also (according to an authority in these matters) loss-making and heavily borrowed.
Now the why. Anomaly has been haemorraghing money recently and needed a fresh financial injection. Superficially, Anomaly has been performing very well, particularly on the advertising front. For instance, it recently won a major advertising brief for Budweiser against staunch opposition from mainstream agencies. The incubator ‘intellectual property’ division, Anomaly IP, is what has been losing money by the shedload. There’s more on this in my earlier post. Following its appearance, Johnson assured me that I was misinformed about the company’s financial performance. I leave you to judge who was right.
Interestingly, Johnson noted after the MDC deal was struck: “Given the degree of independence we have all become used to, it was essential that we are ‘fueled’ not ‘controlled’.” No doubt he is right about one thing. A deal struck with one of the premier league global marketing services groups (which he and his partners seem to have considered) might have been very “controlling” indeed. On the other hand, they are neither “loss-making” nor (even in IPG’s case) “heavily borrowed.”
UPDATE 11/2/11: Johnson has again been in contact with me, to point out that the MDC Partners deal was not driven by any lack of profitability within his own company. “It’s a strategic choice,” he tells me. “At a certain point in your evolution there’s client pressure to go global. Either you do it, or you don’t. We think it’s the right way forward. But to build a global micro network, we’re going to need more funding.” Hence the logic of the deal.