A non-executive viewpoint: adding value to media businesses

Featured in LDC’s latest Media Sector Report.

Jerry Buhlmann, Non-Executive Chair of two LDC-backed media businesses – leading digital marketing agency Croud, and education media specialist Hybrid, has more than 30 years’
international experience in the media sector.

Previously CEO of Aegis Group PLC and then of Dentsu Aegis Network, Jerry led several high-profile acquisitions, including the £3.2bn sale of Aegis Group PLC to Dentsu and the acquisition of Merkle. Here, he gives his expert insight into the sector’s current trends, outlines ways media businesses can remain agile in a fast-paced environment and discusses what management teams looking to secure private equity investment should consider.

“The media sector is broad and fast-paced, and the speed of digital disruption is transforming the way we all consume media. With the approach of generative AI and the use of large language models, this pace of change is likely to accelerate rapidly in the next few years.

In broadcast, the video streaming market remains strong as people opt to customise their viewing experiences, and, as broadcasters move away from prime-time TV, where audience numbers are decreasing, this is leading to a refocus of sector investment into more streaming content. Conversely, more traditional ad-funded channels, which are struggling to attract advertising revenue, are losing audiences.

Online advertising is, and will continue to be, dominated by Google with social media platforms like Instagram and TikTok gaining pace, driven by an increasing focus on first-party data.

However, performance marketing is likely to change significantly in the next twelve months with Google AI Overviews and the whole basis of search algorithm functionality shifting from key word search to key question response through large language models. This will
significantly disrupt both organic and paid search with uncertain consequences in terms of results but certain price increases due to reduced real estate. This is a threat but also an opportunity for agencies which quickly spot trends and advise accordingly.

More broadly, as advertising spend shifts towards accountable performance marketing, the gap between response and brand marketing, and specifically how brands are built in a more digital economy, is increasing. Traditionally it’s been about creating the image of a brand, but this has shifted towards a paradigm where customer experience defines a brand’s salience and equity. A media agency with digital-savvy brand consultants supported by strong data analytics can add a lot of value here.

Also, as communication becomes more real-time and addressable, we’re seeing a convergence of technology and marketing, and businesses that can combine the two stand in good stead to create a more impactful real-time marketing offering.”

The Market for Media Sector M&A

“Despite complex market conditions, investor attracting strong valuations and seeing high levels of competition in sales processes. Buyers want to know if an acquisition will provide them with more scale, and whether the media business will provide good synergies if they integrate it into existing areas of their operation. They also want to know if the acquisition will bring in new skills and whether there’s an adjacent capability to cross-sell and up-sell.”

Thriving in the Current Climate
“The recent economic climate has been tough and media businesses can expect their clients’ budgets to be frozen and to have longer lead times for revenue. But even amid challenging market conditions, those that focus on driving new business to take advantage of opportunities will continue to grow.

As green shoots appear, media businesses should think about refining their proposition in preparation for when the economy begins to thrive again. In the past, when conditions have improved and clients start spending more money, many agencies take that moment to review their partners and check they still have the right team in place.

By reinventing and strengthening their business during a downtime, agencies can be ready and refreshed for when better times arrive.”

The Power of Agility and Disruptive Innovation
“In such a disruptive market, being constantly attentive to products and services to ensure they remain relevant is essential. The biggest differentiators here are speed and agility. Successful businesses respond to market trends quickly and with real energy to maintain momentum.

The advantage that provides to agile media businesses in an increasingly competitive environment shouldn’t be underestimated. Innovation in a disrupting market is vital to add value to the client’s marketing effort.

Importantly, to be truly successful, everyone in the business needs to understand the growth strategy.  Management teams shouldn’t shy away from overcommunicating their vision and strategy to the entire organisation. It is essential for everyone, especially in growing networked agency groups, to be aligned.”

How Non-Executive Directors Add Value
“Adding value through years of previous experience is an essential skill for a Non-Executive Director – operating as a ‘pool of truth’ that’s seen lots of different scenarios before. You need to deliver experience and mentorship, help with risk avoidance, offer guidance, remain calm in a
storm, be prepared to intervene in a crisis – but try not to interfere otherwise – the list goes on!

I try to steer management in the right direction and guide them to make their own decisions, while using their time efficiently, as it’s easy to be distracted. It’s essential management teams stay focused on what makes the business successful, so I remind them to stick to their strategy and work hard, while remaining agile to achieve success.”

Finding the Right Private Equity Investor
“The right private equity partner knows the difference between activity and progress. Many management teams are highly active, but they might not be making real progress against their growth strategy – and private equity partners can help bring that focus. It’s important to choose a private equity partner that has relevant sector experience to help add value, and LDC has this in spades. I’ve worked with lots of different private equity firms – all with very differing approaches, but for me, LDC’s supportive culture and regional footprint make it stand out from the crowd. LDC is also relatively unique as it doesn’t raise funds and invests entirely in the growth stage of a business. So whether this is to expand geographically, diversify a product range, or even undertake an active M&A strategy, it’s all about supporting growth.”