The Financial times reported last month that Microsoft has thrown its digital marketing agency Razorfish on the grill. The Financial Times rumour names Morgan Stanley as the financial firm who has been appointed by Microsoft to find a buyer for Razorfish. What makes this appear to be more of a fire sale is the low price the analyst is rumoured to have placed on Razorfish valuing the company at between $600-700 million dollars.
Microsoft paid $6 billion for aQuantive in May 2007, with a 2x premium on the shares previous days closing price. Some estimates on the purchase price and revenue figures calculated that it might take Microsoft around 15-30 years to recoup its investment in aQuantive. Based on this data and if Razorfish is valued at between $600-700 million this would signal more of a fire sale, so we thought that a link that might be suitable how to Cook Razorfish.
When Microsoft purchased aQuantive it included Razorfish and the Atlas Ad Platform with an original price carrying a 80% premium so this recent valuation rumour for Razorfish seems much too low for such a valuable company. Rumours are that parties reported to be in discussions to buy Razorfish is Publicis Groupe SA the world’s 4th largest marketing company.
The biggest points which show that Publicis Groupe SA might be the likely buyer is a recent agreement with Microsoft to establish a broad strategic agreement for digital. This broad agreement aims to ensure the companies can work closely on 3 core objectives: Content, Performance & Audience. Based around these core concepts they can work to bring better value and more efficacy to their clients and seek to potentially level the playing field with Google.
Razorfish is a very successful digital marketing agencies which according to its Wikipedia page in 2008 alone, Razorfish has won over 75 creative awards including 10 Webbys, 16 WebAwards, 3 OMMAs, 2 ADDYs, and 3 Create Awards. Razorfish is also quite a large digital agency with over 2,000 employees worldwide and working with a majority of the worlds largest 500 companies.
The potential benefit to the buyer of Razorfish is a massive client roll, exclusive technology and a powerful brand which is likely to be worth more than $600-700 million for an agency such as Publicis Groupe SA. If this sales rumour turns out to be true it is likely even in these tough funding climate to start a bidding war as the only growth seems to be in digital. Sir Martin of WPP recently outlined that their digital is around 25% of their business and they are expanding their digital offering considerably throughout the world, which could be assisted by a purchase such as Razorfish.
The other bigger global agencies besides Publicis Groupe SA which are likely to want a piece of Razorfish are: WPP, Omnicom, Interpublic who could benefit from an increased number of higher growth digital projects.
We have listed some of the manyRazorfish client projects:
* Ford – Ford Sync
* Honda Formula One – My Earth Dream
* Mercedes – Mercedes-AMG
* Audi – A4 Global Drives
* Coca-Cola – iCoke & World Cup Campaign
* Coors – 4:53 Silver Bullet
* Krafts – Chips Ahoy
* L’Oreal – Garnier Nutritioniste
* Red Bull – Red Bull Fusion
* Visa – Visa Discounts
Healthcare & Life Sciences
* Roche – FluFacts.com
Media & Entertainment
* CNN – Cnn.com
* Conde Nast – Concierge.com
* Netflix – Instant Viewing Player
* Nielsen Media Research – NielsenMedia.com
* Sony – Playstation Portable
* New York Times – NewYorkTimes.com
* JCPenney – Ambrielle
* Levi Strauss & Co – Levi’s RedWire DLX
Technology & Telecom
* AT&T – Digital Lifestyle Center
* Microsoft – Xbox
* TED – Encyclopedia of Life & Pangea Day
Travel & Leisure
* Northwest Airlines – NWA.com
* Startwood Hotels – Global Search Website
If you want to learn more about Razorfish follow them on twitter.
Update NYTimes confirms that Publicis Groupe purchased Razorfish for $530 million in stock and cash, who will continue to advertise on MSN & Bing as part of a 5 year deal. Microsoft also confirmed it will continue to spend money with Razorfish as part of the deal.