Isobar Buys Search Firm iProspect for $50M

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Isobar Communications LLC, a marketing services network created in July by British agency holding company Aegis Group PLC, paid $50 million for iProspect Inc., a search engine marketing firm with clients such as L.L. Bean, PeopleSoft, John Deere, Sharp and Xerox.


Announced yesterday, the deal -- consisting of $32 million in upfront cash and the rest via a two-year earn-out -- is Isobar's first in the United States and seventh worldwide in the past five months. It is intended to position Isobar as a serious service provider in interactive marketing as larger budgets are allocated to that discipline.


"What's important about search is it's quite complex, and it's very important to have a tool set," said Sarah Fay, president of Isobar U.S., Boston. "What iProspect provides to us is a proprietary tool set that Isobar can use globally to grow our search practices around the world."


IProspect, Watertown, MA, joins Isobar agency brands like Carat Interactive and Freestyle Interactive in the United States. Carat offers interactive marketing services to clients like Western Union, Adidas, Kodak and its Ofoto arm, RadioShack and PerfectMatch.com.


Overseas components of Isobar (www.isobarcommunications.com) include top local interactive shops such as Britain's Diffiniti, French search marketing firm Takezo, Germany's Xenion, Spain's netthink, Australia's DigitalOne, Italy's Web A, South Korea's Agency W and Taiwan's WWWINS. Including iProspect, Isobar has 37 offices in 24 markets worldwide generating online billings of more than $500 million.


Isobar's move into search recognizes the potential of that online tactic. A JupiterResearch report released last month claimed paid search this year will account for $2.6 billion, rising to $3.2 billion in 2005, $3.8 billion in 2006, $4.4 billion in 2007 and $5.5 billion in 2009.


Search marketing exceeds 30 percent of all U.S. online advertising spend, according to industry estimates.


The deal also is an acknowledgment that ad agencies will have to buy search marketing expertise rather than nurturing it organically.


"Part of the reason for that is that search engine marketing is the rocket science of online marketing," said Fredrick Marckini, founder/CEO of iProspect. "It's extremely complex, with an ever-changing landscape of search engines and algorithms. Additionally, what worked last year may not work this year. And every month the competition gets fiercer. About the only way to be dominant in search is to do only search."


IProspect offers natural search engine optimization, paid inclusion management as an Overture OSMX partner and Web site conversion enhancement service. It also offers pay-per-click ad management through its iSEBA bid management agent and Web analytics via a search-configured version of WebTrends.


IProspect's technology helps its 70 clients gain better paid and organic rankings on search engines such as Google, Yahoo and MSN. The company shares clients with Isobar's Carat, including John Deere.


"Search requires a very high amount of expertise to provide, and people are at a premium who are in this space," Fay said. "So there are 85 people at iProspect who do nothing but search all day long. What they're really good at is training people to become search engine marketers in a really short period of time."


IProspect is looking to hire people with client relationship and marketing skills along with an understanding of the Internet.


The key iProspect players in the transaction, Marckini and iProspect president and chief operating officer Robert Murray, have committed to staying with the firm through the two-year earn-out period.


"I think the time was right to move search upstream into the agency," Marckini said, "so that we're sitting in the boardroom at the point of marketing budget formulation and because we recognize that search is necessarily an integrated component of any marketing campaign."


Mickey Alam Khan covers Internet marketing campaigns and e-commerce for DM News.com. To keep up with the latest internet marketing news subscribe to our free weekly e-mail newsletter DM News Daily by visiting http://www.dmnews.com/cgi-bin/newslettersub.cgi


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