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Electrify investment memorandum v3m


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Electrify investment memorandum v3m

  1. 1. Electrify Worldwide LtdInvestment Memorandum4th June 2013
  3. 3. A. INTRO/EXECUTIVE SUMMARY1. Business SummaryElectrify is a brand engagement agency, for the new era of „experience brands‟. For brandsthat know that how they behave, is even more important than what they say.By leveraging offline live brand experiences and events online, through social mediacontent and engagement - we generate real world „social currency‟, personalrecommendations, and maximum reach.We are accountability and ROI driven, always measuring the tangible business impact ofwhat we do.
  4. 4. A. INTRO/EXECUTIVE SUMMARY2. Proposed Financing• £200k total investment required
  5. 5. • Reputable, highly competent and widely recognised senior management team.• CEO, ShazSmilansky is a world renowned author of book „Experiential Marketing a practicalguide to interactive brand experiences‟, who also co-developed a Master‟s degree at LondonMetropolitan University: Digital Meets Experiential.• Agency has proprietary IP processes (BETTER brainstorm, and SETMESSAGE planningsystems amongst others) relating to creative idea generation, strategic planning, campaignexecution and evaluation. These remove emphasis on talent (and therefore keeps operation lowrisk and highly scalable), as clients „buy into‟ agency methodologies - rather than just individualswithin client service team. Thus negating key common downsides to a „people business‟.• Branded engagement, experiences and content are incredibly high-growth and topical focusesfor brands within their marketing mix, and play increasingly key roles in the success of brands‟social media and mobile programs.• The agency pitch team regularly win business against rival „experiential agencies‟ who havebillings in excess of £10m p/a.• Blue-chip client roster already exists, opportunities to grow those accounts substantially, isenormous.• Agency has implemented systems and processes, as well as agency wide compliance of aA. INTRO/EXECUTIVE SUMMARY3. Pros of the Investment/Reasons to Invest
  6. 6. A. INTRO/EXECUTIVE SUMMARY• Long sales cycles required to sell to senior decision makers in blue-chip brands, often salescycles can span 2-6 months, impacting cashflow.• Clients often leaving their roles (moving to other brands); heightens need to network broadlywithin the company‟s marketing department.4. Cons/Key Risks
  7. 7. A. INTRO/EXECUTIVE SUMMARYSales and net profit forecasts forMay till December 2013(8months) are below:4. Deal Goals – Use of ProceedsRevenue8MonthsNet MarginConservative£1,294,14815%Reasonable £1,493,64818%Positive£1,929,64723%Sales and net profit forecasts forJanuary till December 2014 (12months) are below:Revenue12MonthsNet MarginConservative£1,729,00015%Reasonable £2,128,00020%Positive£3,000,00028%To provide a budget for business development focused marketing, and working capital toallow for the „longer sales cycles‟.
  9. 9. B. MARKET OPPORTUNITYThe marketing and advertising industry is growing in the UK and globally - despiterecession reports. „Engagement‟ continues to be considered highest on priority lists forbrands and „content‟ is the biggest buzz word of the moment, and its popularity is goingnowhere - with it being pinned at the most topical area for future growth in coming years.Live brand experiences and events are well known to be prime sources for both consumerengagement and digital content. Logical, bearing in mind a real life experience is clearlymore engaging and authentic than a pre-engineered traditional advertisement.Results International have 21 years of experience and over 200 deals completed, they arethe market leader in providing corporate finance and consulting advice to MarketingCommunications companies.According to Results International:“Experiential has found its way to the heart of the marketing mix. The agencies that willsucceed in this arena are those that can match their experiential expertise with digitaltechnology and social media creating brand engagement. Social media-ready brandexperiences that transcend live and digital domains are the future.”1A. The Market
  10. 10. The Advertising Association and Warcs quarterly Expenditure Report (UK) forecasts growth of 2.7per cent this year and 5 per cent in 2014, and sites that Adspend grew 2.3 per cent year on year toreach £17.2 billion in 2012. Global ad spending grew by 3.2% last year, but some sectors faredbetter than others, details Nielsen.Econsultancys first Content Marketing Survey Report, sponsored by Outbrain, is based on a surveyof more than 1,300 marketers working for brands, agencies, and publishers. It shows: Increasedengagement is the most commonly cited objective for content marketers, with 52% of in-housemarketers and 58% of agency marketers listing this as one of their top three business objectives.Over 90% of respondents believe that content marketing will become more important over the next12 months.In the 2013 Market survey report, Ad Media Partners asked senior executives in leading content andmarketing services companies “For services firms, is your company considering expanding oracquiring any of the following services businesses?” „Experiential Marketing was selected 32% ofthe time, Social Marketing was selected 64% of the time, and Mobile Marketing was selected 67% ofthe time‟.1B. Key Stats Below:B. MARKET OPPORTUNITY
  11. 11. The landscape for „experiential marketing agencies‟ is comprised of a variety of agencies whooffer a varying scope of services, ranging from tactical promotional staffing agencies, to eventagencies and more content and engagement driven agencies such as Electrify. However, thereare few who focus on and harness a strategic proposition or effectively offer auxiliary serviceswhich strengthen and leverage the power of an event or live experience as branded content.Agencies vary from independents to those owned by groups, though true global players with aproposition aimed at C-Suite brand executives are limited. Future competition is likely to comefrom strengthened offerings provided by larger agencies buying smaller ones.2. Competition:B. MARKET OPPORTUNITY
  12. 12. C. SERVICES
  13. 13. C. SERVICESWe design integrated marketing communications that are content driven, and builtaround live brand experiences.We offer brand strategy, creative thinking, and create long-term brand platforms thatdrive brand advocacy and ultimately evangelism.Prospects and clients are Marketing Directors, CMO‟s, VP‟s of Marketing, BrandManagers, Marketing Managers, Heads of Brand Engagement, Heads of SocialMedia
  26. 26. Current Clients Include:D. SALES/MARKETING STRATEGY
  27. 27. D. SALES/MARKETING STRATEGY1. Our ideal customers which we are targeting with our business development andmarketing initiatives, are as previously mentioned; CMO‟s, Marketing Directors, SeniorBrand Managers, Brand Managers, Marketing Managers, Heads of Marketing, Headsof Social Media at major blue-chip brands. We have a primary focus on the followingsectors: Electronics, FMCG, Alcohol, Finance, and Online brands. We can reach ouraudience via a number of channels such as creating thought leadership and socialevents, and meeting them at networking events and speaking opportunities. We alsohave a secondary strategy to gain introductions (not white-label) which is to completeprojects through media, digital and creative agencies.1. The cost to acquire a client varies greatly depending on a number of factors, we havedesigned a diagram demonstrating an overview to our sales and marketing strategybelow.
  28. 28. 3A.
  29. 29. The sales process tends to take around 3 months on average, to take a prospect through thepipeline, though the range is broad; varying between 1 month and 1 year. It then takes an average of6 weeks to implement a project following its sign off, and around 4 weeks following on from projectcompletion in order to extract another brief from the client.3B.
  30. 30. D. SALES/MARKETING STRATEGY4. Major customers are aforementioned, with the addition of some other media agency partners.Case studies of past projects can be found as an appendix.Historic spend and forecasted spend (aligned with „Reasonable‟ middle tier forecasts) are brokendown in the following table.
  31. 31. D. SALES/MARKETING STRATEGYClient BS 2011 BS 2012 BS 2013 Electrify 2013 Electrify 2014Spend Spend Spend Spend Forecast* Forecast**LOVEFiLM £50,000.00 £429,000.00£50,000.00 £0.00 £60,000.00 £100,000.00Amazon £0.00 £0.00 £0.00 £0.00 £120,000.00 £350,000.00General Mills £150,000.00£0.00 £10,000.00£266,859.00£332,000.00 £350,000.00Casio £0.00 £83,000.00 £58,000.00 £0.00 £110,000.00 £110,000.00Symantec £0.00 £60,000.00 £104,000.00£0.00 £0.00 £125,000.00Nationwide £0.00 £0.00 £27,000.00£24,274.00£200,000.00 £250,000.00Zurich £0.00 £0.00 £49,000.00 £0.00 £75,000.00 £250,000.00BrownForman*** £0.00 £250,000.00 £0.00 £0.00 £100,000.00 £300,000.00L’Oreal £0.00 £30,000.00 £0.00 £0.00 £85,000.00 £250,000.00MSM £0.00 £0.00 £25,000.00 £0.00 £75,000.00 £200,000.00Fitness First £0.00 £0.00 £70,000.00 £0.00 £15,000.00 £70,000.00Paddy Power £0.00 £0.00 £5,000.00 £0.00 £20,000.00 £75,000.00Total £200,000.00 £852,000.00 £398,000.00 £291,133.00 £1,192,000.00 £2,430,000.00Media Agency Spend Spend Spend Spend Forecast* ForecastRapport(Yoplait+)£0.00 £0.00 £123,000.00£210,207.00£229,000.00 £370,000.00Talon £0.00 £0.00 £0.00 £0.00 £50,000.00 £100,000.00Kinetic £657,396.00£344,449.00£11,200.00£48,307.00£109,000.00 £100,000.00Total £0.00 £344,449.00 £134,200.00 £258,514.00 £388,000.00 £570,000.00Combined Total £857,396.00 £1,196,449.00 £532,200.00 £549,647.00 £1,580,000.00 £3,000,000.00Reasonable Target n/a n/a n/a£1,929,647.00 % of TargetExisting Client Target n/a n/a n/a£1,580,000.00 82New Biz n/a n/a n/a £349,647.00 18Historically, LOVEFiLM have been able to determine their own marketingspend and behaviour,however, now that Amazon have started to play a much more assertiverole in the business,marketing spends are subject to another level of sign off. Amazon arevery traditional in their way of thinking, as such spend with LOVEFiLM issubject to a decrease from last year. We are aiming to infiltrate andprove that our channel can produce quantifiable results for Amazon, withthe aim of building a strong long term relationship.Brown Forman: in 2012 we were tasked with creating and projectmanaging the renowned JD Barrel Tree, this represented a high spendthrough our channel. The decision was taken this year was to not repeatthis activity, however there are indications that it may reappear in 2014.The aim is to infiltrate via our know contacts and generate new opps andbriefs aside from the Barrel Tree.*This is the combined total of current spend and forecasted spend for2013**Please note that all 2014 forecasts are just that*** We are classing BF as a direct client, as this is now the case
  32. 32. D. SALES/MARKETING STRATEGY5. High Level P&L Under Different Scenarios for 2013 (8 months) and 2014OVERHEADS (not inc. direct)Category 8 MonthsPersonell £341,003Marketing £30,660Admin £31,383Office Facilities (inc rates) £55,890Finance £23,336£482,2722013 (MAY-DEC 8months)Revenue 8 Months Direct CostsOverheads(inc. direct) Net ProfitConservative £1,294,148 £592,913 £1,075,185 £218,963Reasonable £1,493,648 £672,713 £1,154,985 £338,663Positive £1,929,647 £847,112 £1,329,384 £600,263BONUS SCHEMERevenue 8 Months % of Salaries Profit Bonus Pool Net Profit After Bonus Net MarginConservative £1,294,148 10% £218,963.00 £29,982.00 £188,981.00 15%Reasonable £1,493,648 25% £338,663.00 £74,956.00 £263,707.00 18%Positive £1,929,647 50% £600,263.00 £149,912.00 £450,351.00 23%
  33. 33. D. SALES/MARKETING STRATEGY2014 Annual 12 MonthsOVERHEADS (not inc. direct)Category AnnualPersonell £512,047Marketing £48,000Admin £46,560Office Facilities (inc rates) £96,020Finance £35,000£737,627Revenue AnnualDirect Costs(40%)Overheads(inc. direct) Net ProfitConservative £1,729,000 £691,600 £1,429,227 £299,773Reasonable £2,128,000 £851,200 £1,588,827 £539,173Positive £3,000,000 £1,200,000 £1,937,627 £1,062,373BONUS SCHEMERevenue % of Salaries Profit Bonus Pool Net Profit After Bonus Net MarginConservative £1,729,000 10% £299,773.00 £45,044.00 £254,729 15%Reasonable £2,128,000 25% £539,173.00 £112,609.00 £426,564 20%Positive £3,000,000 50% £1,062,373.00 £225,218.00 £837,155 28%
  34. 34. D. SALES/MARKETING STRATEGY6. A breakdown of spendassociated with ourproposed businessdevelopment /marketing tactics isbelow.These activities havebeen tried and testedas effective in the pastand will be important inElectrify‟s customeracquisition plansCHANNEL ACTIVITIES Q2 Q3 Q4MAY JUNE JULY AUGUST SEPT OCT NOV DECOPPORTUNITY SOURCINGIndividual, tailored emails (insight driven)Telemarketing follow up calls (afteremails) £1,000.00 £1,000.00 £1,000.00 £1,000.00 £1,000.00 £1,000.00Intermediaries (AAR etc)Partnerships / JVs (Agency relationships)WEB /BRAND PRESENCESEO £150.00 £150.00 £150.00 £150.00 £150.00 £150.00 £150.00 £150.00Website (Programming updates) £200.00 £25.00 £25.00 £25.00Website & Branding (Design / branding) £1,250.00Tumblr BlogTwitterLinked In GroupInstagramOther Social MediaOffice Signage £750.00SCHMOOZING CRM LISTDrinks events - inviting prospects anddormant clients £500.00 £1,250.00Lunches - inviting prospects and dormantclients £550.00 £550.00 £550.00 £550.00 £550.00 £550.00 £350.00 £500.00Gifts - birthdays, new jobs, xmas, otherholidays £100.00 £100.00 £100.00 £100.00 £100.00 £250.00Launch party £500.00EXPERT EVENTSSpeaking opportunities - contacting allevent organisersSeminars - hosting them £1,000.00 £1,000.00Roundtable dinners - hosting them £800.00 £800.00
  35. 35. D. SALES/MARKETING STRATEGYChannel ActivitiesMAY JUNE JULY AUG SEPT OCT NOV DECCONTENT PARTNERSHIPSResearchWhitepaperSlideshareInfographicsVideos £100.00ArticlesResearch Launch Event £875.00Capture page £50.00CREDIBILITYAwards - enteringPR (online + offline) £525.00 £525.00 £525.00 £525.00 £525.00 £525.00 £525.00 £525.00League tablesNETWORKINGNetworking EventsMarketing Society £430.00 £100.00 £100.00 £380.00 £200.00 £200.00 £200.00Industry LaunchesSEGMENTED E-SHOTSNewsletter (HTML) £70.00 £70.00 £70.00 £70.00 £70.00 £70.00 £70.00 £70.00Personal emails (text)Data £500.00 £500.00 £500.00DMPost items (showreel, books +)Direct response postal letters £340.00 £600.00 £600.00£4,420.00 £4,965.00 £4,195.00 £2,520.00 £5,175.00 £3,620.00 £2,295.00 £3,470.006. Continued Q2 Q3 Q4
  37. 37. CEO & Exec. Creative Director, and PartnerA marketer, writer, strategist, creative, visiting professor andentrepreneur – Smilansky is a recognised star in the marketingfield.Shaz is Visiting Professor at the London Metropolitan University,has co-develop the first Masters degree on Experiential Marketingin the UK „Digital Meets Experiential‟. She sits on the board of theWorld Brand Congress 2013, has been a regular guest speakeron BBC radio (Wake up to Money, and BBC Radio 5 Live).Shaz is also the only UK author to have released a book onExperiential Marketing, her book titled „Experiential Marketing, apractical guide to interactive brand experiences‟ is sold ininternational markets. The book is published by Kogan Page,Europe‟s leading independent business publisher.Shaz regularly flies around the globe to speak at industry events,and teach reputable agencies and high profile brands theExperiential Marketing methodology that she speaks about in herbook. Shaz often hosts workshops which focus on the relationshipbetween live brand experiences and social media, as well as howShazSmilanskyE. SENIOR MANAGEMENT TEAM
  38. 38. Financial & Commercial Director, and PartnerDavid is a multi-discipline Financial Accountant with over tenyears‟ experience within the within the marketing and PR industry;a dedicated and enthusiastic professional with extensive financialand general business management experience.David develops and implements the production of financial andmanagement information, leads on creating a culture ofcommercial awareness within the agency, and overseesnegotiations and volume deal arrangements to achieve costefficiencies with suppliers.Prior to joining the team, David was at Hills Balfour Ltd – The UK‟sleading Marketing and PR company in the travel & tourismindustry, there he was responsible for the Finance, IT, HR andOffice management departments, and grew the company turnoverto over £5m and over 50 staff with 3 subsidiary companies.David ShobanjoE. SENIOR MANAGEMENT TEAM
  39. 39. Strategy & Business Development Director, and PartnerAfter graduating with a Master‟s degree with Merit in EventsMarketing and Management, Iain has risen within the world ofMarketing at an accelerated pace as Strategy & BusinessDevelopment Director, and partner to lead Electrify‟s newbusiness and marketing machine whilst maintaining overallresponsibility for the agency‟s strategic output.By leading on outstanding sales processes, pitches and proposalsIain has successfully acquired clients for the agency such asHaagen-Dazs, LOVEFiLM, Casio and Jack Daniel‟s on home turf,as well as brands such as Symantec and ING for globe-spanningprojects across multiple markets worldwide.Iain is regularly invited to speak on the topic of brand engagementand lead workshops and brainstorming sessions for agencies,brands and educational institutions.Iain SwanE. SENIOR MANAGEMENT TEAM
  40. 40. Client Services Director, and PartnerAn experienced, experiential marketing industry senior marketer,Dave is process driven, a strong communicator and leader ofdiverse teams with demonstrable track record of successfulcampaign development and account growth.Dave rose to Client Services Director and partner position atElectrify after driving successful and quantifiable growth across awide range of Blue Chip brands brands including LOVEFiLM, JackDaniels, Haagen-Dazs, Casio, Nationwide and Symantec.David WilliamsE. SENIOR MANAGEMENT TEAM
  41. 41. F. EXIT ANALYSIS
  42. 42. Exit is likely to happen around 2017 after 3 full operating years, to a major group such as Havas,Omnicom, WPP, Aegis, Chime etcA strategic sale is likely. As marketing spend is shifting, there is a prediction of an increased focus oncreating engaging social media content, long term „branded experience platforms‟, driven byauthentic „real world‟ experiences.There is a growing appetite from C-Suite at bluechip brands to work with strategically focusedexperiential marketing agencies on „brand activation‟ planning, especially those with an ethos thatfuses mobile, social and experiential. As an agency we specialise in effectively designing strategiesthat combine live brand experiences with social media, and providing insight driven, structuredplanning methodologies for integrated experiential marketing services.The following research from the recent 2013 Market survey, demonstrates „multiple‟ predictions inthese areas.F. EXIT ANALYSIS7. Exit Analysis
  43. 43. F. EXIT ANALYSIS6%9%20%24%16%26%9x or Greater8x7x6x5xLess than 5xFIG. 33 – Multiple of EBITDAReasonableIn Valuing Firms inEXPERIENTIALMARKETING
  44. 44. F. EXIT ANALYSISFIG. 38 – Multiple of EBITDAReasonableIn Valuing Firms inSHOPPERMARKETING1%7%20%27%17%27%9x or Greater8x7x6x5xLess than 5x
  45. 45. F. EXIT ANALYSISFIG. 28 – Multiple of EBITDAReasonableIn Valuing Firms inSOCIALMARKETING15%18%20%20%11%15%9x or Greater8x7x6x5xLess than 5x
  46. 46. 10%12%17%14%24%24%9x or Greater8x7x6x5xLess than 5xF. EXIT ANALYSISFIG. 40 – Multiple of EBITDAReasonableIn Valuing Firms inUSER GENERATEDCONTENT
  47. 47. F. EXIT ANALYSISFIG. 42 – Multiple of EBITDAReasonableIn Valuing Firms inVIDEO12%7%20%24%12%15%9x or Greater8x7x6x5xless than 5x
  48. 48. G. LOCATION
  49. 49. G. LOCATIONOur offices are located on Rivington Street in the thick of Shoreditch, right next to Cargo and theIniva Gallery, in an art deco building,originally built in the 1930‟s. The offices boast professional meeting rooms and a roof terrace, perfectfor client meetings and industrynetworking.
  50. 50. APPENDIX
  51. 51. APPENDIXMedium Adspend(£ million)% change on2011Internet 5,416 13.2Internet – pure-playdigital only4,793 12.9TV & video ondemand4,480 0.4National news brands 1,535 -6.0Magazine brands 1,101 -9.4Out-of-home 970 9.5Radio 553 3.8Cinema 213 25.6Total UKadspend 17,172 2.3UK Adspend 2012Source: AdvertisingAssociation/Warc
  52. 52. The 2012 experiential league tables for companies ranked by their 2011 turnover from experientialactivities is as follows. (Numbers in brackets shows last years position in the league tables, 2011turnover from experiential marketing activities and % growth since 2012).1. Jack Morton Worldwide (-, £42.1m,n/a)2. TRO (1, £28.2m, +15.6%)3. RPM (2, £24.0m, +50.9%)4. iD Experiential (11, £12.7m,+101.6%)5. Iris Experience (3, £11.8m, +3.5%)6. Ignite (6, £11.3m, +36.1%)7. Closer (5, £10.6m, +1.0%)8. Exposure Promotions (7, £8.6m,+3.6%)9. Blackjack Promotions (9, £7.9m,+16.1%)10.Carbon Marketing (4, £7.8m, -29.1%)11.Innovision (-, £7.5m, +10.3%)12.N2O (16, £7.2m, +53.2%)13.Fizz Experience (8, £6.9m, -4.2%)14.Sledge (17, £6.9m, +50.0%)15.Event Marketing Solutions (15,£6.4m, +28.0%)16.Sense Marketing Services (13,£6.1m, +7.0%)17.Merchandising Sales Force (19,£3.0m, +8.3%)18.Initials Marketing (-, £2.9m, +45.0%)19.Haygarth (18, £2.4m, -47.8%)20.Ear to the Ground (-, £2.3m, +4.5%)21.The Field (-, £2.3m, +27.8%)22.The Lounge Group (21, £2.0m,+17.6%)23.Disrupt (-, £1.9m, -)24.Link Communication (22, £1.3m,+16.7%)APPENDIX
  53. 53. APPENDIX22%27%32%32%32%40%42%47%49%51%59%64%66%67%33%31%37%50%41%45%49%65%70%80%74%75%Shopper MarketingCorporate CommunicationsExperiential MarketingSearch MarketingMarket ResearchIntegrated Ad AgenciesCRM/Database MarketingMarketing TechnologyMarketing/Strategic ConsultingUser Experiences/DesignInteractive Agencies/WebDevelopmentSocial MarketingAnalyticsMobile Marketing20122013Q. For services firms, is your companyconsidering expanding or acquiring any of thefollowing services businesses?Fig. 5 – 2013 vs.2012 Areas of Expansion Interest- Services• The top three areas of interest for expansionor acquisition remained consistent with lastyear: mobile (67%), analytics (66%) and social(64%)• Overall, the percentage of respondentsinterested in the various sectors has declinedsince last year.• The sectors with the largest declines in interestdeclines in interest were search marketing (by18 percentage points), social marketing andmarketing /strategic consulting (both by 16percentage points).
  54. 54. APPENDIXAreas of Expansion Interest - ContentQ. For content firms, is your company consideringexpanding or acquiring any of the followingcontent businesses?• The highest levels of interest for expansion oracquisition were digital media (69%), customcontent (60%), app development (56%) anduser-generated content (56%)• As with services sectors, overall interest inthese various content sectors has declinedsince last year.• Through big data received a great deal ofmedia coverage in 2012, only 21% ofrespondents are considering expanding oracquiring in that sector.2%20%21%24%36%40%49%49%56%56%60%69%39%66%59%79%79%90%79%79%Place-Based MediaAd networksBig DataTraditional MediaInformation/Database PublishingLead GenerationMarketing ServicesOnline VideoUser-Generated ContentApp DevelopmentCustom ContentDigital Media20122013
  55. 55. This document is distributed by Electrify Worldwide Ltd (“Electrify”). This document is not intended to be a formal offering document. All informationcontained herein is strictly Private and Confidential. Interested parties should form their own independent views. No responsibility or liability is, or will beaccepted, by Electrify, in relation to the accuracy or completeness of this document and any such liability is expressly disclaimed. This document isintended for distribution inside the UK. Recipients of this document in jurisdictions outside of the UK should observe applicable legal requirements andtake the appropriate advice. Electrify is registered in England with company no. 8496601 at 81 Rivington Street, London EC2A 3AY.