Is Sapient’s deal to acquire Nitro Group for a reported US$60 million a sign of the future? As many in the industry have pointed out, a digital shop purchasing a creative agency appears to turn standard industry practice on its head.
The deal creates a single agency called SapientNitro. “This acquisition is a reflection of a changing world,” Sapient trumpeted in its announcement. “Brands need intelligent, technology-savvy stewards in a world where all advertising… will be interactive.”
The deal creates a single agency called SapientNitro. “This acquisition is a reflection of a changing world,” Sapient trumpeted in its announcement. “Brands need intelligent, technology-savvy stewards in a world where all advertising… will be interactive.”
The rationale behind the merger, Nitro’s China CEO Jennifer Tan says, was to create an agency that practises digital and traditional advertising equally well, without treating digital as a lagging partner. She argues that clients are “tired of the holding-company model that forces them to work with a wide collection of specialist agencies.”
She adds: “Within that model, they don’t have a brand steward or a master strategist to help them drive their brands in an increasingly digital world offset by ongoing media fragmentation. They don’t have the time or budget to waste trying to corral and integrate a diverse group of agencies. That model simply does not work.”
That view receives some support from other creatives in the region. “It may be easier to induct a digital culture in a traditional agency than in most other acquisitions, where the acquiring traditional agency ends up influencing its digital counterpart,” says Sonal Dabral, regional ECD at Bates141.
Among the benefits of the SapientNitro model, says one digital source, is that digital shops have been good at understanding how a brand behaves online and how it communicates with audiences, but they’re not as astute in understanding brands’ long-term positioning. A digital agency bringing in ad specialists would fill these gaps.
Sapient’s business looks at a range of services that fall under the ‘digital’ umbrella. The Boston-based company offers more than just digital creative and design/build; it is also involved in analytics, in-store marketing, e-commerce and search - the grittier end of digital. The addition of creative firepower to that mix could be compelling.
But others in the industry express doubts that such a merger will deliver anything new, and even fewer think there will be similar deals in the future. Barney Loehnis, network director at Isobar Asia-Pacific, says ad agencies should already be communicating with digital agencies to ensure consistent brand identity, and “it’s a strange idea. Why can’t your digital agency extend itself offline?”
Candidates for similar mergers in the future may also be hard to come by. According to one source, the Sapient/Nitro deal was unique because they were both independent, comparably sized companies that fit each other’s personas, and Sapient was a digital agency wealthy enough to sustain the cost. Most other digital agencies of comparable size belong to holding giants such as WPP, Publicis and Omnicom, which have tended to align digital assets with creative or media networks rather than the other way round.
“The only digital agencies that might have the ability to do this is AKQA or maybe Red Dot or Profero - and these are only a maybe; there aren’t too many shots,” the source adds. For now, it seems, SapientNitro will remain the exception rather than the rule.
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