Australian agency group Photon shows Naked ambition

Chris%20Wood%2C%20PhotonThe acquisition of Naked Communications by Photon has raised some eyebrows because so few in the UK market have heard of the Australian group.

Photon began to gain a profile in the UK only at the end of last year when it bought branding agency Corporate Edge (MW September 6, 2006). Other recent UK acquisitions include experiential agency Sledge, Frank Public Relations and REL Field Marketing.

However, Photon does not have a base in the UK and it appears to have no plans to set one up. The Sydney-based company, which listed on the Australian Stock Exchange in 2004, is run by a management team of six. Chief executive Matt Bailey admits Photon has a low profile, although those close to the group say this is down to the management team’s nature rather than a reflection of the company’s progress.

Last year, Photon posted a 56% increase in net revenue from $126m (£58m) in 2006 to $195m (£89m) in 2007. Its earnings before interest, taxes, depreciation and amortisation (EBITDA) were also up 60% last year.

Photon has a presence in 16 countries and last year acquired a total of 13 businesses around the world. On Monday, it spent £16.5m to add Naked – whose shareholders include advertising agency Mother – to its stable. The deal also includes a four-year earn-out clause.

Self-management style

Naked chief executive Nigel Long says Photon first came to the agency’s attention in September last year, via Naked’s Sydney office.

“They are very much about buying good brands and companies and leaving them to self manage, but they are also putting money in to help fund our growth,” he adds.

The message is the same from other Photon-owned companies. Corporate Edge chairman Chris Wood says: “Photon does not sit on top of you. They’re there to get behind you when you need something.”

Photon has signalled its plans for aggressive growth in the UK, US and Asia but some wonder whether there is room for another big marketing services group.

For now, its closest UK rivals, which include Canadian group Cossette and the UK-based Creston, appear unconcerned, saying more competition is good for the industry.

But Jeremy Miles, chairman of Miles Calcraft Briginshaw Duffy, which sold a 51% stake to Cossette in 2005, claims Photon’s supposedly unique “hands off” model resembles the set-up at Cossette.

“I don’t think you could compare a WPP or an Omnicom to Cossette – it’s a very different kind of communications group,” he says. “It has gone around the world buying up highly creative entrepreneurial businesses and never once have we been advised by Cossette how to run our business.”

Corporate Edge’s Wood says that, while his company had approaches from other groups in the past, it chose Photon because it would not be “bound hand and foot” by the head office.

Out in the field

Photon boss Bailey will not be drawn on its next move in the UK market, but he points out that the group has a strong focus on field marketing businesses.

It also owns creative “hot shop” agencies in Australia, though it still does not have an advertising agency in the UK. However, Bailey says that traditional advertising agencies make up only a very small part of the group.

He adds: “We’re not going to buy just for the sake of it [but] we will be opportunistic and acquisitive.”

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