StrawberryFrog is up for sale, but will anyone want to buy it?

Word reaches me that StrawberryFrog, the maverick international advertising network, has hoisted a discreet “For Sale” sign. Whether it will succeed in its objective is open to doubt, as will be seen below.

First a little background. StrawberryFrog – curiously named after a colourful, nippy and spectacularly poisonous Latin American amphibian – was founded in 1999 by Canadian entrepreneur Scott Goodson as an agile alternative to the big, cumbersome, advertising holding companies. Goodson, who remains to this day head honcho, likes to see himself, and his company, as an avatar of what is called Movement Marketing, a concept first dreamt up by sociologist Neil Smelser. Stripped of jargon, this means “avantgarde” or “revolutionary”. In practice, Goodson was one of the first to spot that small, manoeuverable agencies with strong creative ideas that travelled well could use digital leverage to undercut the legacy giants – with their expensive but increasingly quaint bureaucratic structures wedded to traditional advertising.

For a time things went extraordinarily well. With only 2 offices, one in Amsterdam and one in New York – which deployed a staff of no more than 70 “Frogs” (but rather a lot of freelancers) – Goodson and his co-founder in Amsterdam, Brian Elliott, pulled in some extraordinary global business. We’re talking Sony Ericsson (when that was still a name to conjure with), Mitsubishi Motors Europe, Pfizer, RIM’s Blackberry, Ikea, Heineken, Morgan Stanley, PepsiCo, Emirates – to name but a few.

In 2009, the agency reached its apogee when – against all odds –  it seized the prized global digital account of Procter & Gamble’s biggest brand, Pampers, from under the nose of Publicis Groupe’s Digitas and WPP’s Bridge Worldwide. It was not even a P&G roster agency. Pampers remains StrawberryFrog’s most prestigious account.

But that was then. From thereon in, it seems to have been downhill.

Already, the cracks had begun showing when in 2008 Elliott broke away, rechristening the StrawberryFrog Amsterdam business Amsterdam World.

True, Goodson (left) patched up the network. He set up a new Amsterdam office, and had already opened a successful Brazilian boutique in Sao Paolo, a shop in Mumbai and disclosed his intention to set up an office in London (project later aborted). But he signally failed to control his New York hub, which has gone into freefall.

Not a week seems to go by these days without news of redundancies, stories emerging of Goodson’s increasingly tyrannical behaviour and acrimonious exits by senior staff. Two of his former top team are, I’m told, suing. One, ex-chief strategy officer Ilana Bryant, wants $2m for alleged breach of contract (I should add in fairness that StrawberryFrog is counter-suing her for $50,000).

All of which, as can be imagined, does little to impress clients, who have become still more alarmed by rumours that StrawberryFrog’s NY office is increasingly reluctant to pay its suppliers’ bills.

By way of illumination, some interesting “numbers” recently came into my hands – from what appears to be an unimpeachable source. They are as follows:

NY office: Dire. Revenue has declined from $17m (2010) to  about $12m (2011). A loss of $600,000 is expected this year. NY has about 40 employees, down from 76 a year ago.

Amsterdam and Brazil have different ownership structures to New York: Amsterdam is smaller by revenues, and expected to generate a $200-300,000 loss this year; Brazil has about 80 employees with $8-9m revenue – it is profitable.

Back in 2007, StrawberryFrog came quite close to sealing a deal with Publicis Groupe (it failed at the due diligence stage). This time a sale is more urgent. But I wonder whether Goodson will be able to find a buyer.

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3 Responses to StrawberryFrog is up for sale, but will anyone want to buy it?

  1. Emphatically untrue: This blog post above has false allegations about StrawberryFrog. It’s unfortunate that this blogger sees fit to use the internet as a way to make untrue accusations and blatant exaggerations.

    It is no secret that people would be interested in acquiring StrawberryFrog. We have a unique global position. What a shock. Every year StrawberryFrog is approached by possible buyers interested in the agency because of our innovative approach, great track record and our significant blue-chip clients. We have consistently wooed and won huge global accounts in competition with major corporate agencies.

    I always wonder how stories of this sort come up – what is behind the tone and how facts can be so off base. Our business is doing well in the economy, there is one ongoing contract dispute with a former employee, and the claim that our suppliers in New York are not being paid is utterly false.

    Which begs the question: what are the motivations behind the “unimpeachable” anonymous source for which Stuart Smith relies on his information. Could it be that a network agency is feeling threatened by our success and trying to undermine us through underhanded means? I suppose that is one approach you could take to try to poach clients. It’s very slimy, but it’s an approach.

    BTW, Stuart Smith never tried to contact me about this story. It’s true that bloggers aren’t journalists, but you’d think they’d want to get their facts straight.

    Scott Goodson, StrawberryFrog

    • stuartsmithsblog says:

      Facts “off base”, eh? I’m sorry you feel that way Scott. “This blogger’s” track-record on M&A stories is actually quite good. Cheil to buy Barbarian Group (denied, of course, at the time); Dentsu’s abortive bid for Razorfish; Omnicom to buy Communispace; Ipsos to buy Aegis’s Synovate business for €550m: you read them here first. Of course, StrawberryFrog could be the exception that proves the rule. Certainly, in the light of your uncompromising public stance on my story, you must hope so. Stuart Smith.

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