U.K. marketing services company Engine is buying Deep Focus as it seeks to establish a larger imprint outside of Great Britain.
Deep Focus is Engine’s first U.S. asset. Engine, which owns ad agency WCRS and PR shop MHP in the U.K., set up Engine USA in February to guide its expansion. It brought on Ammirati & Puris founder Martin Puris and John Bernbach, former president of DDB Needham, as partners. Engine last week raised $100 million from private equity firm HIG Capital. The capital infusion was earmarked for expansion into the U.S., Brazil and China.
Deep Focus has built an expertise in social media, running lauded campaigns for clients like AMC (“Mad Men Yourself”) and Microsoft’s Bing (“Home Turf Finder”). Deep Focus CEO Ian Schafer has become a ubiquitous presence on the industry conference circuit and a well-regarded expert in helping brands navigate social media. Last month the agency launched a location-based marketing practice.
Puris said Engine USA would look to add up to a dozen agencies to represent other marketing disciplines. It hopes to offer clients a menu of different agencies to put together an integrated team of shops in better fashion that the big holding companies can do, he said.
“[Clients] are not getting partners that really understand how to manipulate and navigate in the new world,” he said.
Instead, clients have the choice of either maintaining the status quo or acting as a “general contractor,” he said.
As part of this new model, Schafer will not work toward an earnout, as is typical in agency deals. Instead, the acquisition agreement is a mix of cash and a stake in the new venture. Financial terms were not disclosed.
“The teamwork architecture isn’t about competing for earnouts,” Schafer said. “It’s about building something together on the same team.”
Schafer founded Deep Focus in 2002 after serving as director of new media at Miramax. The shop, which includes creative, media and PR, mainly worked for entertainment clients before branching out to work with Nike, Glaceau, Microsoft and others. In recent years, it has described its expertise as being in “marketing engagement.”
Engine reported $54 million in revenue for the first half of the year. It has bought a few U.K. agencies in 2010, including PR company Penrose Financial, management consulting firm CVL and social media shop Jam. Engine was formed in 2004 when now co-CEOs Peter Scott and Debbie Klein led a buyout of WCRS from Havas. Engine bought out Havas’ minority stake in November 2005.
Deep Focus becomes the latest high-profile independent agency to find a buyer not among the major ad holding companies. Hearst snapped up iCrossing in June. Dentsu bought 360i in January. The Japanese holding company is also said to be in the running for AKQA, one of the few remaining independent Web shops.
Sources said bidding for Deep Focus included traditional agency groups and media companies.
Jordan Edmiston Group advised Deep Focus on the transaction.