Strategy changes delay Aegis’ plan to acquire Communicate 2

Strategy changes delay Aegis’ plan to acquire Communicate 2

Mumbai: A year after UK-based marketing and communications group Aegis Group Plc. announced the acquisition of a majority stake in local search marketing firm Communicate 2, the deal is yet to be completed.

Patrick Stahle, chairman and chief executive officer (CEO), Aegis Media, said the deal is still being discussed and has not fallen through. He declined to elaborate. Vivek Bhargava, founder and CEO of Communicate 2 said the deal hadn’t gone through because of a change in the strategies of the two firms—brought about by the economic downturn.

Aegis, represented in India by media planning and buying specialists Carat and Vizeum, expected the acquisition to significantly ramp up its skills in search and digital communications, and attract business for its own digital arm Isobar.

Bhargava said his agency has been growing rapidly and that it is working with several of Aegis’ global clients. He declined to divulge the names of these companies. Two advertising executives who did not want to be identified—one was formerly with Aegis—said Aegis is rethinking its investments in India and looking at collaborative partnerships that do not involve any equity investment.

Still, Communicate 2 is continuing to look for potential investors, claimed the CEO of the local arm of an Aegis rival. Bhargava said his company is still considering whether or not to sell a stake.

Communicate 2, based in Mumbai and Pune, specializes in search engine marketing solutions in the banking, financial service and insurance sectors. Its client list includes ICICI Bank Ltd, HDFC Bank Ltd, ICICI Lombard General Insurance Co. Ltd, and Bajaj Allianz General Insurance Co. Ltd.

While some advertising executives say the failure of the deal could hurt Aegis, Ashish Bhasin, chairman (India), Aegis Media, said that Isobar already has certain search engine marketing capabilities in-house and would outsource whatever capabilities it didn’t have.

Search engine marketing refers to techniques used to increase the visibility of the website of a company or product or service on search engine results.

WPP Group Plc.’s GroupM Media India Pvt. Ltd, is investing heavily in search marketing. R. Gowthaman, leader of South Asia, Mindshare, GroupM Media said the firm had 10-15 employees dedicated to search.

In addition, WPP is working towards launching GroupM Search to facilitate the search marketing needs of all the agencies that are part of GroupM such as Maxus and Mediaedge: cia.

“We will bring WPP-owned digital marketing firm 24/7 Real Media and search marketing agency Outrider to India and these (too) would be a part of GroupM Search," said Gowthaman.