SVG Media, the Smile and Vun Group owned digital marketing business, which rolled up several advertising ventures operating in India, has been acquired by Dentsu Aegis Network. SVG Media was backed by Keith Nilsson’s Xplorer Capital and TPG Growth. Xplorer Capital had bought the 35% stake held in Tyroo from Yahoo in November 2011. Note that TPG Growth also has a joint venture with the Smile Group.
The deal (updated):
– How much stake: 89% in SVG Media
– What they’ve bought: DGM India, Komli Media and Seventy Nine, which collectively claim a reach of over 150 million unique users a month. The three companies bought include SVG Media Pvt Ltd, DGM India Internet Marketing Pvt Ltd, Networkplay Media Pvt Ltd. The deal doesn’t include Tyroo Techlabs, which will be retained by the Smile Group, and led by Tyroo’s CEO, Siddharth Puri. It’s worth noting that two of the three businesses (DGM and Komli Media) were bought by SVG Media; SeventyNine was incubated, sold and bought back by the group.
– Value of the deal: The Economic Times, citing sources, put the deal at $110-150 million. Note that all that Dentsu has said is “The impact of this transaction on Dentsu’s consolidated financial results for the fiscal year ending December 31, 2017 is expected to be minimal.”
– Employees and offices: SVG has 280 employees across four Indian cities – Gurgaon, Mumbai, Chennai and Bangalore
– Client relationships: Over 700 monthly active advertiser campaigns across other locations, including Dubai, Indonesia, and China.
– SVG Media becomes SVG Columbus, a part of Dentsu’s AsiaPac digital marketing agency Columbus, which is in nine locations across AsiaPac.
– People moving to Dentsu Aegis Network: Anurag Gupta, founder of DGM, which was acquired by SVG, will be CEO of SVG Columbus. Chirag Shah, CEO of SVG Mobile & SeventyNine, Deven Dharamdasani, COO of SVG Mobile & SeventyNine, Akshay Mathur, Business Head of Komli, and Ashwani Mehta, Finance Controller, will join the SVG Columbus managing board. Shah and Dharamdasani were co-founders of SeventyNine. The SVG Columbus managing board will be chaired by Vivek Bhargava, CEO of Performance, Dentsu Aegis Network.
– People exiting SGV Media: Harish Bahl (Founder of Smile Group and Chairman of SVG Media) and Manish Vij (Founder of Vun group and CEO of SVG Media) will no longer be directors of SVG Media.
Dentsu is positioning this as beefing up their “data led search, performance marketing, and mobile” capabilities, looking to “capture the fragmented long tail publisher market in India”; that business, according to the company, now accounts for 35% of its revenues. Dentsu Aegis Network now has 1300 employees in India.
Scale matters in Advertising in India
Scale, which becomes the combination of Dentsu Aegis Network and SVG Media, matters: Google and Facebook account for a majority of the advertising in India, by virtue of their scale and targeting. The only other two significant contenders that I can think of, for a definitive position in a major brands marketing plan, are Times Internet, with their Colombia programmatic advertising platform and the scale they’ve built with their Times Global Partners partnerships, and SVG Media.
Scale helps address some of the systemic issues of lack of professionalism in India’s advertising agency ecosystem: ridiculously long payment cycles and unreliable payments, apart from the corruption that people only talk about in whispers. Scale helps address some of these issues, which is likely to be the case with SVG Media and its portfolio of advertising businesses.
As we’ve mentioned earlier, SVG Media was playing the long game: they saw other ad networks, especially Komli, come in, splurge and lose money. As Manish Vij, Co-Founder Smile Group points out in the press release, “We built SVG Media with the philosophy of profitable growth and market leadership. This philosophy is not the most popular in digital industry but has been very gratifying for SVG Media founders and key leadership.”
As we’ve mentioned in the past, it’s almost as if SVG Media focused on running a profitable business, waiting for high-spending-fast-expanding businesses like Komli Media to be made up for sale. Here’s a little bit of history around the rollup that Dentsu Aegis Network has bought:
– DGM India, April 2012: SVG and DGM India MD Anurag Gupta had bought the affilate ad network company for Rs 3.35 crore from Asia Digital Holdings, in April 2012. Till the year ended 31 December 2011, DGM India had reported a turnover of around Rs 15.99 crore, a gross profit of Rs 5.33 crore, an EBITDA of Rs 1.78 crore, with a Net Asset value of Rs 1.8 crore.
– SeventyNine, 2014: Seventy Nine had been incubated within SVG Media, and in November 2012 sold it to Bertelsmann group company Gruner+Jahr. In December 2014, SVG Media bought back SeventyNine from G+J. SeventyNine had been started by Chirag Shah and Deven Dharamdasani.
– Komli Media, 2015: which had raised around $97 million in funding over the years, and sold its Asia Pacific business (believed to be its main-stay, with businesses in Hong Kong, Thailand, Singapore, Vietnam, Philippines, Indonesia and Malaysia) to Axiata for just $11.25 million. SVG group had bought its India business in 2015, for an undisclosed amount.
– NetworkPlay: G+J had also sold the digital agency NetworkPlay to SVG Media in November 2012; NetworkPlay was an ad network and events business, and has been integrated into SVG, no longer operating as an independent entity.
What happened to?
– NNext, a media solutions company co-founded by Anurag Gupta, who is now joining SVG Columbus as its CEO. NNExt was listed on the SVG Media website in 2015, when we had reported the Komli acquisition.
– Velocity, a data backed display ad network, which SVG Media had launched in India and the Asia Pacific region in 2013.
– Precision Match, a data business SVG Media had launched in 2012