Merger sees three key digital agencies combine for scale

Brandsh is a specialist in the mobile and social media field, Stonewall+ is one of the oldest and most respected digital agencies in the country and Cambrient is known for its content management solution (positioned as a marketing rather than CMS platform). The new combined agency will employ over 120 staff members and work with clients ranging from General Motors and Standard Bank to Seacom and DStv. No retrenchments are expected.

Strategy and brand leadership

Jason Xenopolous, Native’s CEO and CCO.

Xenopoulos (@JasonXenopoulos) says digital agencies have had to see strategy and brand leadership driven by traditional ad agencies while they were looked upon as little more than production houses.

Internationally, however, the trend has been increasingly for strategy to be lead by a digital perspective. According to Xenopoulos, the scale and skill sets that come with the merger will allow Native to take up that strategic role in partnership with brands and traditional agencies.

Xenopoulos says previously specialist backgrounds did not allow digital agencies to fully participate in brand custodianship and that a full service offering will remove a major hurdle in getting digital represented at a strategic business and brand development level.

According to Xenopoulos, the commonality of culture, positive chemistry between the different management teams and limited overlap in skills and strengths facilitated the creation of Native. The shareholders of the existing businesses, plus Xenopoulos, will be the shareholders in the combined company.

Each will continue operating

Each of the brands will continue operating for the near future as current clients might prefer to continue engaging on a specialist level within the Native group.

A single office space will be created for the Cambrient, Stonewall+ and Brandsh teams in Johannesburg. Cape Town, where Stonewall+ is headquartered, will see the company remain on the Stonewall+ premises, while the skill sets for the office will be built up with the help of the Cambrient and Brandsh teams.

Jarred Cinman, Cambrient software and creative director – Native’s chief inventor.

Jarred Cinman (@jarredcinman), creative and software director and one of the founders of Cambrient, says that, with the digital market changing and maturing, specialist firms such as his own basically had three options. They could either sell to traditional agency groups, try to build out the necessary skills and tools themselves or team up with other players in the market.

Selling wasn't an option

Selling wasn't an option for Cinman, who says the market still has plenty of space for growth, so selling now would make little sense and that building these skill sets on your own risks organisations spreading themselves too thin. Teaming up with other players will allow Cambrient to leapfrog as much as five years of internal business development, says Cinman.

According to Cinman, the industry already anticipates consolidation and various players have started bulking up, so the creation of Native for him is less about size and more about bringing together the minds of a group of market leading experts and making this available to clients. He expects Native to increase competition, as well as improve delivery, in the digital space.

As larger budgets move to digital, Cambrient would not have been able to compete for them directly on its own, says Cinman, whereas he considers Native to be a competitive entity able to take on substantial pitches.

Ben Wagner, Stonewall+ CEO – Native’s chief marketing warrior.

Ben Wagner (@BenWagner), CEO at Stonewall +, says his group believes the merger will grow both share of wallet and the depth of client relationships.

Challenge for role of brand custodianship

In time, he says, digital-orientated agencies will challenge traditional agencies for the role of brand custodianship (Wagner attaches a time frame of five years for this scenario to start playing out in South Africa), especially as agencies of scale start to emerge from the digital space. Niched players, says Wagner, will feel out in the cold and would have to compete on price to compete at all.

Xenopoulos admits that traditional agencies are already vying for similar territory, as they continue to buy or create digital offerings of their own. That said, he feels the merger of Cambrient, Stonewall+ and Brandsh marks a shift in the nature of the SA advertising market.

It changes, he believes, the dynamics and competitive environment in the digital space in which traditional agencies are also trying to compete. It will help underscore the importance of digital on a strategic brand level and starts to build "digital power houses" able to shrug off a simpler supplier function.

Angus Robinson, Brandsh CEO – Native’s ECD.

Angus Robinson (@angusrobinson), founder and CEO of Brandsh, was not available for comment at the time of writing this article.

For more:

• Bizcommunity: Cambrient, Stonewall+, Brandsh merge
  
• The Daily Maverick: Digital marketing's new 800-pound gorilla
  
• To be live shortly: www.native.co.za
  
• Bizcommunity press offices: Cambrient, Stonewall+ Digital Marketing, Stonewall+ Media and Brandsh
  
• Existing company sites: www.cambrient.com, www.stonewall.co.za and www.brandsh.com
  
• Twitter: @NativeSpeak
  
• Twitter Search: cambrient OR #native OR brandsh
  
• Google News Search: cambrient brandsh stonewall+ native