Dubai: The state of the market should not get in the way of a good deal — the ad agency network Grey Group certainly seems to think so. Last week it confirmed the picking up of a majority stake in the digital agency hug, based in Dubai.
And the reason is quite straightforward — try and secure a good fit between their traditional ad services and digital.
“[It’s] fair to say that Grey has been largely a traditional agency in the region,” said Nirvik Singh, Chairman and CEO, Grey Group, Asia, Middle East and Africa. “We want to build a future facing company with digital at the heart of our operations and culture. This acquisition allows us to build on that ambition.”
For the region’s ad sector, the deal is unique in quite a few ways. In recent times, such acquisitions are as rare as finding a client wanting to raise ad spend. The big local agencies have held the line on such transactions, believing they are better off keeping costs down than engage in major equity deals.
According to Singh, Grey’s rationale for a deal now was clear from the outset. “As more countries [in the region] begin to rely less on oil, we will see more industries and categories opening up,” he added. “We clearly believe the digital space will transform the consumer and the geographies.
“In hug, we found a company that was leading the conversation in the region and felt privileged that they wanted to partner with us.
“We have always believed integrated offerings are the best way to address the ever changing consumer and marketing landscape. And we will obviously do the same here — based on our client’s needs.”
Last year, hug totalled up revenues of around Dh19 million and had gross assets of bout Dh7.4 million. The agency was founded in 2009 by Oussama Jamal and Tim Baker. Clients handled include some of the automotive brands for Al-Futtaim, Americana (which has the licensing rights for Hardee’s, TGI Fridays and Krispy Kreme), Commercial Bank of Dubai and Dubai Tourism, among others.
“Any deal of this size takes a bit of time,” said Singh. “However, from our first meeting with Oussama and Tim, we believed that we had found the kindred spirit that we wanted as partners.
“Their quest for curiosity, leading the social conversation and desire to constantly find brand/consumer solutions made it easy to get into this partnership. Percentages of ownership were agreed by both sides very early on.” The value of the deal as such was not revealed.
Grey — itself a part of WPP — will retain hug’s 145 full-time staff, and expand the geographical footprint beyond Egypt and India, where hug already has a presence.
And what of the actual integration of hug’s core operations? “Integration is an ongoing process ... there never is a finish line,” said Singh. “We have ambitious plans for the region and we will continue to look for more strategic partnerships.
“I do believe that 2017 is showing signs of a slight turnaround and I am confident that the momentum will continue.”
