With a stated objective of “significantly” growing its media capabilities, MDC Partners has acquired independent media services company RJ Palmer in a deal valued at US$25 million.
Established in 1979, New York-based RJ Palmer is the 10th largest media agency in the United States, with more than US$800 million in billings for blue chip clients. In addition to media planning and buying, RJ Palmer also specializes in branded entertainment and corporate barter through its three-year-old Trade X Media division.
Speaking with Marketing on Thursday afternoon, MDC chairman and CEO Miles Nadal said the deal also includes “significant additional incentives” for RJ Palmer management to grow the business over the next few years.
“We think the media buying business, especially with digital and social media, provides huge opportunity for entrepreneurial firms that really challenge conventional wisdom and have a more insurgent-like approach to the business,” said Nadal. “We think now is a great time, with the growth of online media, to back entrepreneurial firms and to build so that we have completely integrated capabilities for all aspects of marketing services.”
All of the principals in RJ Palmer, including CEO Peter Knobloch, will remain with the company, said Nadal.
RJ Palmer represents MDC’s first major acquisition in the media buying space, which Nadal characterized as the final area of the marketing communications sector in which it did not have a significant presence.
“This gives us a lot more scale, and I think you’ll see us make other acquisitions that will give us even more scale in the media space,” he said. “Obviously with the changes in online media and social media, it’s probably the area that’s gone through the most dramatic transformation in the last number of years, and will continue to do so.”
Nadal said the objective in the coming year is to significantly grow MDC’s media capabilities through both organic growth and acquisitions, with a particular focus on digital, social media and direct response. His goal is to increase combined media billings from MDC-owned agencies from $1 billion currently to as much as US$10 billion in the next five to 10 years. “I think we really are capable of accomplishing that,” he said.
“We’re very optimistic on the [media] world, and we’re certainly optimistic about our industry,” he said. “Most importantly, we’re extremely enthusiastic about the position we’re in and our opportunity to capitalize on this environment and the position we’ve got as the leading entrepreneurial alternative to the big firms.”
RJ Palmer is the latest in a string of agency acquisitions for MDC Partners dating back to 2009, and Nadal said the company remains bullish on the marketing communications sector.
“We’ve been the most rapidly growing [marketing communications] firm in the world,” he said, citing organic growth of 15% and overall growth of more than 50% over the past year.
“We have always had a philosophy to capitalize on a changing environment,” he said. “We’ve always had a belief that we should be fearful when others are greedy and greedy when others are fearful.”
How solid is MDC’s agency lineup? Is media the right area for Nadal’s future investments? Post your thoughts in our comment section.
