Victor Knaap (pictured, above right) is insistent when Campaign asks the chief executive of MediaMonks why the Dutch content production company agreed to join Sir Martin Sorrell’s S4 Capital for an estimated €300m (£266m). "We didn’t sell!" he says.
Knaap and his business partner, Wesley ter Haar (pictured, above left), point out the deal is a merger. They have shares in Sorrell’s new parent company, rather than an earn-out, and will have a say on strategy and M&A thanks to seats on the board.
Ter Haar, who co-founded MediaMonks in 2001, a couple of years before Knaap joined, says of their relationship with Sorrell: "We’re entrepreneurial together."
MediaMonks already has 11 offices in 10 countries, 750 staff, clients including Google, Netflix, Shell and Johnson & Johnson, turnover of €110m and, significantly, one P&L. Knaap looks after Europe and Asia while ter Haar oversees the US and Latin America.
They plan to move into media buying, data and analytics as well as new markets, such as Germany and India. They also want to beef up the UK operation, which they admit has been "a little bit under the radar", and have hired Dutchman Martin Verdult, previously of Ogilvy Shanghai, to be managing director in London.
Sorrell’s swoop for MediaMonks looks to be one of the defining deals of the year – and not only because he set up S4 Capital so quickly after leaving WPP and beat his old company in the race for the production firm.
MediaMonks is a creator of agile and dynamic digital content, finding itself in a sweet spot that potentially gives it an advantage over traditional ad agencies.
Jonathan Davis, managing director of Clarity, the corporate advisory firm that worked on the sale of MediaMonks, says: "Content production has fundamentally become a more strategic capability. There is so much more of it required across so many different channels and platforms. Brands have found that if they have an agency layer between them and the content, delivery risks becoming inefficient and not agile.
"The broader trend, if you look at the larger digital content production platforms, such as Stink and MediaMonks, is that they have significantly more direct-to-brand work than they did three or four years ago."
A platform, not an agency
Knaap and ter Haar stress MediaMonks is a platform, not an agency. "We integrate creativity, technology and production and extend our ideas through data and make [digital] platforms," ter Haar explains. "We create more efficiency for clients, and at a higher level because there’s a singular vision behind it."
They believe silos such as creative, media, PR and so on don’t make sense. "It’s the same customer you’re talking to" across every touchpoint during the "customer decision journey", Knaap says. "All of the touchpoints need content. We create that content."
The key is to be flexible and agile because that’s what brands want. Knaap says more clients are bringing marketing services in-house but they need help in execution. "How do you structure a team like that? How do you have the quality and the cultural DNA? These are the questions we are asking," he adds.
While Knaap and ter Haar are advocates of integration, MediaMonks operates on four "pillars":
- Creative content, such as Audi "Sandbox", a virtual driving experience that combined film, gaming, virtual reality, social and more.
- Data-driven creativity, such as its use of programmatic storytelling to promote The Little Prince for Netflix.
- Online platforms and ecommerce, such as its work for the US Air Force, which combines user experience, technology and data.
- Innovation, such as augmented reality and voice – what they describe as "being there for the new thing" before it goes mainstream.
A few years ago, the duo made some lukewarm noises about the role of advertising but ter Haar says: "It doesn’t mean we are against advertising. Agencies are key to the work we do."
MediaMonks has won 128 Lions – many in partnership with agencies – over the years at Cannes, where Knaap and ter Haar have a reputation for throwing good parties. Their mantra is: "Crafted with care, coded by coffee, celebrated with Champagne."
MediaMonks has "blokey" roots. Ter Haar, now 40, dropped out of school before setting up the business with friends at the age of 23. Knaap, 41, spent time as a sailor before joining the company when he was 26.
To attract talent, they have tried to foster a "more diverse, more inclusive" culture at MediaMonks. "It is a place where people get the opportunity to do some of the best work in their lives without some of the difficult constraints that come with some of the advertising world," ter Haar says.
The Sorrell strategy
Some observers wonder whether Sorrell overpaid for MediaMonks by valuing the business at nearly three times annual revenues. Profits were not disclosed but are said to be upwards of €20m – 15 times earnings.
Stevie Spring, a former chief executive of Clear Channel and Future, says she had looked at MediaMonks in the past: "It’s a deal I would have loved to have done but not at that price."
Knaap and ter Haar aren’t worried about questions surrounding Sorrell’s personal conduct at WPP or the group’s under-performance during his last year in charge.
"We have an unbelievable respect for Sir Martin’s business brain and how he builds businesses," Knaap, who first got to know Sorrell a couple of years ago, says.
They have also had "an amazing response" from clients and joke that they could "test" the merger because the news leaked before the deal was finalised.
What brands think is important to Sorrell. When he explained the rationale for buying MediaMonks, he said he had been "listening carefully" to marketers, who told him they wanted more flexibility, agencies that "co-locate" resources in client offices and a single P&L.
Clients are "not questioning the creative product or the quality of the work – they’re questioning the way that quality creative product is delivered", Sorrell said.
Johnny Hornby, founder of The & Partnership and an old Sorrell ally, finds it "ironic". He says that when Sorrell was running WPP, he kept "competing bottom lines" for its agencies and could have listened to clients "at any time in the last four or five years".
Sorrell has made a fresh start with S4 Capital and has the right to issue up to £1bn in shares because it will be listed on the stock market.
He also has voting power, which means S4 Capital cannot do a significant deal "without his consent". The MediaMonks duo say they will "gladly defer" to his experience.
Ter Haar and Knaap plan to stay at MediaMonks for the next 30-plus years until they are 73 – Sorrell’s age now. "We are not tied in, we’ve invested in," Knaap says.
If S4 Capital started as a peanut, as Sorrell put it, Knaap says: "We’ve probably already grown to a coconut. I don’t know what’s bigger than a coconut but we will find out."