Chinese social-media agencies Resonance China and Skye Media have agreed to merge in a deal expected to be finalised next month, Campaign Asia-Pacific has exclusively learned.
When that happens, the agencies will be united under the Resonance brand, as the Shanghai-based firm is the larger and more widely recognised of the two.
Paul McNeill, founder of Beijing-based Skye Media, will become joint managing partner of the new firm, and will head up business development and client relations. Resonance founder Rand Han will be managing partner, heading up creative strategy, pitching and strategic planning.
Sherry Xie, Resonance’s current client-services director, will head up day-to-day operations from Shanghai, while Skye partner Michelle Yan will lead the Beijing team.
“I can’t stress enough how important it is to have competent partners,” Han told Campaign Asia-Pacific. “That you have people at the top who know what they’re doing and are passionate about doing it. Having Paul and Michelle will make our job easier and more successful.”
M&A consultancy SI Partners in Hong Kong is advising on the deal, which most obviously would give the combined firm a wider foothold in two major Chinese markets.
Since the Resonance office in Shanghai (55 employees) is more than twice the size of Skye (23 employees), the focus initially will be on investing in the Beijing operation to extend its capabilities. By the end of the year, Resonance expects to have close to 100 staff on the payroll.
McNeill has had discussions about teaming up with other organisations, but few met the standards he set. “The only one who did what we were doing was Resonance, and they did a very good job,” he said. “We talked to Rand, and as we moved along we brought up the idea of how we could join forces because it was such a natural fit.”
The two agencies already share much in common, focusing on Chinese social-media campaigns for international brand clients. Skye’s client list includes Diageo, Singapore Airlines, Volkswagen and Intel, while Resonance has an extensive luxury clientele including Richemont, Prada, Dior and Swarovski, alongside many others in the fast-fashion (DKNY, H&M) and travel (Turkish Airlines, Westin, Silkair) sectors.
After the merger, Skye clients will be able to leverage Resonance’s well-established research arm, led by Jerry Clode, who carries out nationwide research with a unique methodology that includes WeChat focus groups.
Resonance, meanwhile, will benefit from McNeill’s extensive agency experience as former APAC general manager of Carat and Greater China CEO of Havas Media.
One challenge for smaller independent Chinese social-media firms is to give multinational clients agency-style client attention at the top-level, while managing hands-on campaigns on a more cost-efficient basis than ad agencies could provide on their own.
These firms are locally staffed, plugged into Chinese digital communities to best execute services like social-media ad buys, Weibo and WeChat campaigns, driving O2O traffic, livestreams, social CRM and KOL partnerships with influencer communities.
Independent for how long?
Resonance has already grown faster than many other independent agencies in China. Adding a Beijing office, with easier access to government, automotive and technology clients will surely bring more attention.
“It makes them much more attractive for a buyout,” the leader of a competing social-media agency told Campaign. “The holding groups are spending a lot to build up social capabilities right now.”
“The only insurance you have as an entrepreneur is having more options, so I hope it does create buzz,” says Han. “From that you start getting newer clients, or getting older clients impressed that we’re growing and want to do more with us, or potentially other companies want to acquire us. That just adds to our list of options.”
Han admitted Resonance has been approached by potential buyers before. A wide spectrum of companies connected to the marcomms industry have been interested. The fact that both Skye and Resonance are debt-free and have been profitable from inception doesn’t hurt either.
Still, Han insisted the focus for now remains simply on keeping the growth going.
“The merger will make us a more serious player, where we can start looking at higher-level budgets covering a greater portion of the Greater China region, which can only be a good thing for our bottom line,” he said.
“We just want to be the best in our industry,” echoed McNeill. "If that means we get more opportunities down the line, then that’s great. We’ll take them as they come.”