Why Isentia’s purchase of King Content proves that content marketing is not a “trend”
Earlier this week I wrote a piece about Isentia purchasing King Content for a massive $48 million and how I believe it’s a game changer for the content marketing industry.
Mumbrella posted the article on their website and it’s received some feedback. I think it’s fair that I explain why I’m enthusiastic about the sale of King Content, why content marketing is more than just a trend and why there is tremendous value in content marketing.
Q: If it’s so valuable why would King Content sell it?
A: I haven’t spoken to anyone at King Content in detail so I don’t know the actual reasons but I would speculate that having started the firm in 2010 with a small amount of capital, a good idea and plenty of energy, they decided that $48 million (60% paid on sale) after five and a half years was a good return for their efforts. Also King Content is now part of a publicly listed firm that has 3,500+ clients and an impressive footprint across Asia. There is plenty of money washing around in the markets for good businesses so as content marketing continues to prove its value, King Content will have a much greater capability to access capital to grow. I’m sure John Croll (Isentia CEO) has the right incentives in place for the King Content team, so when they deliver (which I predict they will) they will share in that success. I think they’ve been smart.
Q: Why would Isentia pay top dollar for it?
A: Content marketing is not at the peak of a trend. The game has barely started. The Americans like to use baseball analogies to describe the maturity of markets. The Content Marketing Institute says content marketing is at the “bottom of the second innings.”
In Australia, “the team are still on the bus on the way to the field.” And as for paying top dollar? Remember everyone thought Facebook paid over the odds for Instagram and look how that has worked out. It will all come down to execution and they will execute. Trust me.
Q: Why do you think this purchase is a validation of content marketing?
A: It has everything to do with the fact I make my living through content marketing. What has happened here is that a publicly listed company has bought a content marketing agency at an EBITDA multiple of 10x. There is now a market for the sort of company I own so that puts a very big smile on my face. The analysts will start to research content marketing and understand how it all works. There will be greater transparency and scrutiny and that is a good thing. As an aside, I started contentgroup way back in 1997 when I left the ABC. This whole notion of using journalistic skills to create content and to tell stories in order that clients could achieve their objectives has been a slow burn. This transaction brings content marketing into the spotlight (at last!!) and that has to be a good thing for everyone in our industry.
I’m happy to answer any questions and thanks to Mumbrella for publishing my piece.
By the way for those of you with an interest, the FY15 results for Isentia have a clear explanation for the strategic rationale for the purchase. It’s on their website and worth a read.
28 November, 2017