Steve Leach – Digital Advertising since the pre-Google Era
Steve Leach is a pioneer in the advertising industry – his first digital advertising company Bigmouthmedia was built before Google! Steve's success has come from being ahead of the game and keeping up with new and emergent trends – recognising the fast-paced nature of the sector. Steve has not only been successful as an entrepreneur, but now invests himself – fuelling growth in small businesses. He understands the advertising industry intimately, and here talking to EntrepreneurCountry Global, provides vital insights to the development of the industry and his story as a major participant in it.
Tell us a bit about your working history; what is your relation to the advertising industry?
"After a chequered start involving the Fire Service and Commercial Piloting I became involved in advertising, specifically digital in 1997 when I founded Bigmouthmedia. In 1999 I founded Brand Intelligence and then went on to co-found Hitdynamics. I sold these businesses in the 2000s and made the move from Executive to Non-Exec. More recently I have been involved with investing, chairing, mentoring and ultimately selling agencies such as Outsideline and Fetch. I was lucky enough to pick up various accolades along the way including the Scottish, UK and European Entrepreneur of the year. I still remain keen to invest in smart digital agencies and am particularly excited about one of my recent investments, a fast growing agency called "8 Million Stories". I sit on a few select boards including Comic Relief and my current non-advertising investments range from private medicine, to healthy chocolate to vodka made from chardonnay grapes."
Why have you personally been so successful as an entrepreneur in the advertising and media industries?
"I'm not sure, hard work I guess, attention to detail and I'm certainly competitive. I love tangible/accountable advertising - the creative side interests me but my fascination lies with ROI, and all my investments have had a strong element of accountable, tangible ROI reporting in common. I'm thorough when it comes to diligence however ultimately I trust my gut instinct when it comes to people and businesses and so far it's done me well. When it comes to investing in agencies it's all about predicting what's coming next, the industry continues to evolve, specialise and sub divide becoming ever more niche from sub sector to sub sector requiring ever more diversely specialised agencies."
What did Bigmouthmedia do, and how was it ahead of its time?
"Bigmouthmedia was some time ago now, it launched before Google! – I sold it to Carlyle Private Equity in 2007 and LBi/Digitas in 2010 but it was one of the first marketing agencies to specialise in search engine advertising. I guess we were pathfinders for what is now a huge industry and one of the most important marketing mediums of its time. As the search engines matured and introduced paid search - Adwords etc – we added these complimentary skills to our portfolio. Ultimately we managed the relationships and positioning between the big brands and the search engines.
It proved highly successful for these brands; finally they had access to accountable search marketing with ROI-based reporting and even results-based billing which was certainly disruptive from a competitor perspective but welcomed by the brands."
With the launch of Google and the digital revolution, how did Bigmouthmedia adapt and innovate?
"When Google came along the relevance of Search Engines really started to get traction and so our business model was exponentially given more relevance and value. In our time we had a strong working relationship with Google and were in fact for some years Google's largest client in Europe. As with most industries it's about staying ahead of the game, predicting what's next and ensuring that your proposition catered for any change. As an example the market consolidated late in the 2000s and brands started to recruit search skills in-house, whilst competitors fought this change Bigmouthmedia embraced this move and set up a recruitment division helping brands identify, train and place the right staff. This became a highly lucrative part of our business. We even created an accredited search-training program that to this day remains a key component of many of the countries marketing degrees."
Which technologies are disrupting the advertising sector, and what impact are they having on the industry?
"Disruption" is a particularly overused term these days but for want of a better term this is where my interests lie. I see lots of businesses looking to shake up the old "middle man" world... Businesses like "Unbound" are fascinating. "Unbound" looks to remove the need for publishers and allow writers to connect with their audience. We're seeing this everywhere, particularly across the arts from playwriting to music. You could argue this isn't disrupting specifically the advertising industry however indirectly removing publishers and their ad budgets certainly would have a significant impact on the Ad world.
Conversely "organisation or smart data serving" is the other area that interests me right now, as content grows exponentially I'm looking for ever-more intelligent ways of collating the data. I'm not talking about simply aggregators I'm referring to intelligent personalised data collation, what 'The Week' did for news some years ago I believe is desperately needed across a number of sectors of the web."
How can an advertising business keep up with current trends in the sector?
"Keeping up or staying ahead of the market is down to the appetite of the organisation, not just the founders or management team but the whole crew needs to be hungry for knowledge and change, they also need to be prepared to accept change when it comes in whatever shape it arrives and then commercialise it. These team skills don't fall off trees so the "right stuff" has to be nurtured and encouraged."
What do you look for as an investor in a digital advertising business?
"For me it's all about "what's next". I went from SEO and PPC (Bigmouthmedia) to analytics (Hitdynamics) to Social (Outsideline) then moved into Mobile (Fetch). Most investors don't like agencies because they rely on people and can be more difficult to scale and ultimately retain skills. This is my skill set and I enjoy and understand the agency world. Whilst the returns can be lower I feel they are safer and more predictable. A good agency exit multiple can top around 10-15 Ebit whilst a digital software proposition could easily be >30 x but to my mind the risks vs reward argument is far less favourable with software propositions. These businesses rely on first-to-market advantage and fast critical mass. This requires large investments for marketing budgets that rely heavily on skilled marketing teams or subcontractors whilst simultaneously stemming off the numerous development and software houses that have the ability to quickly replicate smart existing software.
Finally when considering an investment I look for smart, energetic, open-to-change management teams, profitable bottom line, ability to scale and most importantly a cutting-edge proposition."
Steve was talking to EntrepreneurCountry Global. You can contact him regarding investment opportunities at: Steve@leachpartnership.com
Hear more about the emergent advertising industry at the EntrepreneurCountry Global Forum on February 3rd here.