Saatchi & Saatchi announces acquisition of leading customer experience agency MercerBell

Screen Shot 2016-02-16 at 8.54.25 am.jpgGlobal creative agency Saatchi & Saatchi has acquired 100% of MercerBell, one of Australia's leading customer experience agencies with a 65-strong team specialising in CRM & digital strategy, data analytics, creative & content and technology.

The Sydney-based MercerBell business was founded by Nick Mercer and David Bell in 1999. It has grown to 65 people with clients including Toyota, Foxtel, Qantas, BT, Allianz and the ASX. The new partnership allows Saatchi & Saatchi to offer clients a deeper capability in digital, data analytics, direct marketing and customer experience marketing through MercerBell.
Says Michael Rebelo, CEO of Saatchi & Saatchi: "Clients rightly are looking for deeper capability and scale from their agency partners to provide a specialist range of marketing solutions. This partnership enhances the scope in the strategic advice and ideas we can offer our clients across the entire customer journey. We think having a creative agency and CX agency under the one roof feels like an interesting model for clients."

The partnership with Saatchi & Saatchi provides MercerBell with the opportunity to expand its offering outside of Australia. This acquisition creates immediate opportunities to expand its reach in the region and within the Publicis Communications group of companies in Australia.

Both Rebelo and Mercer say the partnership is about the pursuit of growth rather than the pursuit of commercial synergies.

Says Nick Mercer, CEO, MercerBell: "We have a history of working with Saatchi & Saatchi on Toyota Australia and know the businesses are a strong cultural fit. Through our partnership we will also be able to give our respective teams further opportunity to widen their knowledge and experience, building the strength of our combined offer."

Says David Bell, ECD: "I'm very excited about the creative opportunities this union will bring for both our clients and staff. As Arthur Sadoun the newly appointed CEO of Publicis Communications recently said; "We stand for creative excellence. It must remain our top priority." What a joy it is to be partnering with such an impressive communications group."

The MercerBell team lead by Mercer, Bell and MD Julie Dormand will continue to operate under the existing brand name and will relocate to Saatchi & Saatchi's George Street offices.

(Pictured L-R: Nick Mercer, CEO MercerBell; Julie Dormand, MD MercerBell; David Bell ECD MercerBell, Michael Rebelo CEO Saatchi & Saatchi)

25 Comments

Nut said:

Dave, Nick and Jules are some of the best - congrats guys

Adam said:

Amazing news. Congrats to Jules and the whole team.

Is it just me? said:

How much does it cost to buy 100% of an agency like this? Just curious. Or is that bad manners to ask?

Samuel Tait said:

@Is it just me?
It's an interesting question.

Here are some initial thoughts that might get to a ballpark purchase price.
This is super rough and am making massive assumptions.

In general, when valuing a business, you can use this equation:
Value = Earnings after tax Ă— Price to Earnings ratio (P/E)

(NB:a "standard" P/E ratio is 5, but note there is no real standard and different industries trade at very different multiples)

So here goes:

- 65 staff average salary $100K = $6.5M
- Overheads, and additional operating costs are 25% = $6.5 x .25 = $1.625M
- Total annual costs = $8.125M

Lets say MB, as a specialist agency are making 20% profit
- Profit = Revenue/Sales - Annual Costs ($8.125M)
- 20% = R - $8.125M
- Revenue = 1.2 x $8.125M = $9.75M
- 20% Profit = $1.625M

- Value = Earnings after tax (30% corp tax rate) x P/E Ratio (5)
- V = (Revenue - Annual Costs) - 30% tax x 5
- V = ($9.75M - $8.125M) - 30%tax x 5
- V = $1.625M - $0.48M x 5
- V = $5.69M

With Saatchis buying 100%, then they would have paid $5.69M for MB.
Another way to look at it is Saatchis paid $5.69M for a $9.75M revenue increase in financial performance.


Buy said:

I'd say assuming they made $3 mill last year, on a multiple of 6 (tough times) S&S paid $18 million. Close??

Bewildered said:

Looks like you all have no idea on deals.

Leezy said:


Onya, David - I'm chuffed to bits for you, mate.

BEEN THERE DONE THAT said:

Great for the owners, but bad for the staff. Half will be gone in a year with the rest to follow soon after. Snatchis will just gobble up what was once a great shop.

Invented in the Australian Market said:

The bad news is they did not buy a CX agency (if that is what they expected they were buying).

CX is not just an opportunity for DM agencies to reposition/rebrand themselves, CX encompasses all the interactions a person has with a brand. Which includes customers’ interactions with website, mobile app, software or other digital product (all UX-related items) none of which - sadly - any DM based agency has yet to excel at delivering strategically and creatively.

Blind Freddy said:

Will be interesting to see what happens next on St George, a business both Saatchi & Saatchi and the 'special one' work on?

Gordon Gecko said:

@Tait

Sorry mate, but if you look at the history of recent acquisitions in the digital space in Australia you're so far off the money it's utterly embarrassing.

Samuel Tait said:

@Gordon Gecko

No worries at all - I couldn't find any public data on recent acquisitions.

What do you think was the price?
Or errors in my assumptions?

Acustomer said:

So they sold out. Satchis bought a CX agency that does completely the opposite of CX. Dm marketing doesn't appeal to brand advocates and the whole purpose of CX is to build advocacy. Ad agencies are about to get a huge shake up. Customer experience done correctly has roi of between 70% - 90%. Advertising is about to become extinct. Bad move on both sides though. It's hilarious stuff this. But a golden waistcoat for Dave this year.

Yawn. said:

'Advertising is about to become extinct'-I am so over fuckwit zealots like Acustomer.
Go and join Hillsong and clap hands with all the other evangelical true believers.
Jeeeeeezus I am over you smug pricks!!!!!

Pragmatic said:

Regardless of valuation accuracy, CX vs DM vs etc, golden waistcoats etc this is likely to make the agencies on the Toyota and St George rosters very paranoid.

Dingo said:

How about we all just be supportive of an Aussie agency founded here, done well and now sold to a global giant. Any of us working in this business today would love to tell a similar story one day to our kids!

Acustomer said:

@Yawn

I'm a tue believer. An apostle. A converted. Like i was with the empire before but now im with the rebel alliance vibe. You asked for a prophecy. Advertising as you know it is going to die. Technology is travelling faster than we imagined. We are so close to, VR, AR, Machine learning, AI, Robotics all converging. When that happens companies won't need to advertise as we do today because everything will be about experience. Virtual tools and basic robotics like cleaning and manufacturing will do manual and basic household tasks. Google is learning more everyday. Therefore Robots are learning all with the cloud and IoT n Sh*t. Every answer is available to something that can access encyclopedias at lightening speed. Or every question about you. Everytime you post a video of your demented cat doing something on youtube, google is learning about you. It probably knows your name, age, date of birth, interests, favourite locations, types of food, workplace and education. Now wake up and imagine i put that info in an automated robot. I bet you would f##King love that robot. Catch my drift,. Its no longer about big data now its about the little data details that will make your life easier. The company that can do that wins. Pretty simple game. Now while we wait five years for that to happen. The next best thing companies can do is improve their experience. Innovation is moving too fast. So CX or customer experience is where its at. It is now the number 1 brand differentiater accross the board. The stats are the top 100 Most innovative companies in the world had their revenue increased over the last 5 years because they drove their business out of purpose and not revenue. Money isn't cool anymore. Teams are. People are. Empathy is. Philosophy is. Architecture is. Design is. Advertising aint. The old model is dead man, Wake up and smell the coffee. Or go back to sleep and i'll wake you when the revolution is over. Your stuff will be in boxes. Waiting for you to move out. On the street. With no job. And a robot sidekick called elbowfart.

Sally Mills said:

Well I think congratulations are in order to Nick, Jules and Dave and hopefully they can keep the culture they have proudly built over the years!

ZV said:

Nick, Dave, Julie&co. Congrats. A great bunch of people who deserve every success.

Handel the Truth said:

Its not about who they are its about what they say they are doing.!!!

Well done for selling a strong profitable business, trebles all round.

But its a below the line marketing specialist at its core and can I please state that there is nothing wrong with that its a fine and nobel field to excel in.

However, no matter how capable you are in BTL/Data/CRM that does not afford you the tile of Customer Experience Agency. As Customer Experience has UX at its core and therefore needs to emerge or include an excellent digital, design or product offering at its centre.

Any company renaming its offer CX without UX at its core is all fur coat and no knickers.

Go Dingo said:

I'm with you, forget all this piffle about what they got or if it's a good deal, well done these blokes for having the balls to start a business, give 65 people a job, and then sell it to a multi national. Maybe now they can enjoy a good night's sleep without worrying about all those paychecks they have to sign each month!

Johnson Box said:

Have to agree with Handle the Truth. Mr Bell and company are DM experts with Johnson Box at the core of what they know and do and 'Acustomer' is whining tool.

Acustomer said:

I may be whining BUT am i right or wrong?

Good on them for having a great business and moving onto bigger things that's not what i'm on about. I should have mentioned that. They did good work. Not CX work but good solid DM stuff. But someone mentioned this is the pinnicle of advertising to set up a shop then get bought out by a bigger international shop. If thats as good as it gets then thats a worry. What a terrible life aim to make great ideas in the hope that one day you can sell up. Is That what its about. I don't think it is. I don't think congratulations are warranted either. Yah the top guys made money. Slow hand clap well done team. C'mon. Really.

They could have really looked at CX and changed their whole philosophy as a company. If they want to do CX then lets see what they got. Initiate change and become the best. Maybe they will but judging from the quotes they still think they're in advertising. Or worse marketing. If you want to see if CX is the next thing. Look at all the ad agencies with their innovation labs and the likes of IAG reshuffling their whole senior management. The writings on the wall.

Umberto Boccioni said:

@Acustomer.
Revealing your youth their my friend. This sort of thing has been touted since forever. The communications revolution was going to swallow everything else when telephones were first invented. And then it was going to happen when radio was invented, and then again when TV took over. The internet was touted to do the same thing but guess what, advertising is still here. Now you're saying it will be robots and AI - well history says you're almost definitely wrong. AI is nothing more than another immortality illusion. Someone still has to write an ad. I'd like to see how a cool person such as yourself could get paid in 'Teams', 'People' or 'Empathy' instead of uncool, old fashioned money. I guess it's good if young people are all about the future and how rad it's gonna be but there is wisdom to be gained by looking at history.

Superman said:

Ya ya ya ya ya ya

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