The sale of King Content is a game changer for the Aussie content marketing industry
Last week Isentia bought King Content for a massive $48m. In this opinion piece David Pembroke examines what it means for the Australian content marketing industry.
As I wandered back into my office last Friday morning one of the team yelled out, “So have you heard the news about King Content?”
“Nope,” said I, thinking, “What has Hodgo (Craig Hodges, CEO and Founder King Content) done now, opened an office in Belize?”
“Isentia has bought them for $48 million,” replied the same team member.
“Here in one eye watering, jaw dropping announcement was the market’s validation of content marketing. It’s not a trend, it’s not a buzzword and it’s not a waste of time. It’s a thing. And as luck would have it, a very valuable thing”
Q: if it’s so valuable, why would you sell it?
A: smart people sell at the peak of trends
Q: if it’s at the peak of a trend, why would Isentia pay top dollar for it?
A: they’re a monoline listed media monitoring company looking to diversify through acquisition and aren’t spending their own money, are they?
Q: then why does David Pembroke think this purchase is a validation of content marketing?
A: might have something to do with the fact that he makes his living through content marketing
Content Marketing agencies need to learn the basics or duplicate content, this article was on the authors site 1-2 days prior to Mumbrella:
http://www.contentgroup.com.au.....-industry/
Sammy, Thanks for the response.
I’ll have a crack at your questions.
Q. If it’s so valuable why would you sell it ?
A. I haven’t spoken to anyone at King Content in detail so I don’t know the actual reasons but I would speculate that having started the firm in 2010 with a small amount of capital, a good idea and plenty of energy, they decided that $48 million (60% paid on sale) after 5 and a half years was a good return for their efforts. Also King Content is now part of a publicly listed firm that has 3,500+ clients and an impressive footprint across Asia. There is plenty of money washing around in the markets for good businesses so as content marketing continues to prove its value, King Content will have a much greater capability to access capital to grow. I’m sure John Croll has the right incentives in place for the King Content team, so when they deliver (which I predict they will …. in spades) they will share in that success. I think they’ve been smart.
Q. If it’s at the peak of a trend, why would I sentia pay top dollar for it?
A. That’s the point. content marketing is not at the peak of a trend. The game has barely started. The Americans like to use baseball analogies to describe the maturity of markets. The Content Marketing Institute says content marketing is at the “bottom of the second innings”. In Australia, “the team are still on the bus on the way to the field”.
And as for paying “top dollar”? Remember everyone thought Facebook paid “overs” for Instagram and look how that worked out. It all comes down to execution and they will execute. Trust me.
Q: Why does David Pembroke think this purchase is a validation of content marketing?
A. It has everything to do with the fact I make my living through content marketing. Guilty as charged. What has happened here is that a publicly listed company has bought a content marketing agency at an EBITDA multiple of 10x. There is now a market for the sort of company I own so that puts a very big smile on my face. The analysts will start to research content marketing and understand how it all works. Their will be greater transparency and scrutiny. That has to be a good thing. As an aside, I started contentgroup way back in 1997 when I left the ABC. This whole notion of using journalistic skills to create content to tell stories in order that clients could achieve their objectives has been on a slow burn. This transaction brings content marketing into the spotlight (at last!!) and that has been to be a good thing for everyone in our industry.
Thanks Sammy
Happy to answer anymore questions if anyone wants to post and thanks to Mumbrella for publishing my piece.
By the way for those of you with an interest, the FY15 results for ISentia have a clear explanation for the strategic rationale for the purchase. It’s on their website and worth a read.
David Pembroke
I remember when Spreets was bought by Yahoo.
Very true, AKA; Enabling brands to self publish. History is littered with good and bad buys. PS Don’t forget Governments, NGO’s and not for profits can also self publish with CM.
loved your snappy comeback @enabling brands to self-publish
the deal-a-day sales at peak trend (prior to collapse) is an excellent analogy
and let’s not forget Time Warner’s purchase of AOL…..
David, if you look at many of the post-analyses of mergers or acquisitions made by publicly listed companies, you’ll find that most are net value-destroying for the acquirer
they usually overpay, overestimate “synergies” and.or fiddle and interfere too much
why does this happen so often? because listed companies are expected to always be growing earnings, always expanding their revenue streams, and executives simply like to buy businesses. It’s the retail therapy of the corporate world, for big swinging dicks
.if they have capital for acquisitions, it burns a hole in their pocket…and always remember that it’s shareholder money, not their own…