Deloitte Acquires Acclaimed San Francisco Creative Shop Heat
Move highlights a new era of agency ownership
One reason the agency acquisition market has been so hot is the desire of nontraditional buyers, such as technology and consulting firms, to add marketing muscle and compete for project dollars from corporate CMOs.
Case in point: management advisory giant Deloitte today snapped up 112-person San Francisco shop Heat, a creatively driven firm honored as Adweek's Breakthrough Agency of the Year in 2015.
"We are the single place for our clients to go to connect business strategy with creative strategy and content," said Andy Main, chief executive of Deloitte Digital. "We combine creative chops with the powerful Deloitte platform to help our clients find their own disruptive advantage."
Deloitte Digital has made about a dozen agency purchases since its inception four years ago. Terms of the Heat acquisition were not disclosed.
The shop enjoyed a bravura performance last year, growing revenue about 32 percent to more than $21 million. "After an amazing 2015, we had a big decision to make – stay the course or shoot for bigger, more immediate creative opportunities. We picked the latter," said Heat chairman and executive creative director Steve Stone. "Joining forces with Deloitte gives us a ton of opportunities. It allows us to showcase our work on a bigger stage, provides us with greater resources and gives us access to client relationships that will allow our creatives to do the best work of their careers."
The agency is known for edgy, culturally attuned campaigns for clients such as EA Sports, Bank of the West, Hotwire, Esurance and Credit Karma. Work of note includes a high-octane five-minute trailer for EA's Madden NFL 16 video game, which garnered more than 11 million views on YouTube alone. Also for EA, the shop scored with an innovative trailer for Star Wars Battlefront that showed average folks vanishing from city streets, school yards and commuter trains into frenetic game-play adventures.
Moving forward, Stone, agency president John Elder and managing director Mike Barrett will continue in their current roles, and Heat will retain its brand identity as part of Deloitte.
IBM is another prime example of the trend toward companies outside the marketing arena buying shops. In recent weeks, the tech giant has bolstered its ad-tech ops by adding agencies Aperto, ecx.io, and Resource/Ammirati, along with closing a deal for The Weather Company's digital properties.
Industry experts expect continued activity in the space. "The lines are blurring between technology, IT services and marcoms," said Keith Hunt, managing director of M&A firm Results International. "Now there are enterprisewide digital solutions rather than just for marketing or IT, and the consultants are building teams to reflect that."
Hunt calls the current marketplace "a mixture of opportunity and threat, a very real opportunity for those companies that would be interested in being an acquisition, target and a big threat to the major networks.
"The latter are going to find there are other organizations out there with very large headcounts, wide geographies and strong balance sheets that are muscling in on their territory," Hunt said.
Some marketing companies, however, have bulked up through deals of their own. Interpublic PR network Golin recently absorbed creative shop The Brooklyn Brothers, while Japan-based holding company Dentsu Aegis has made four agency buys since the beginning of the year.
