Cossette buys Dare Digital to round out marketing arsenal

A fledgling but creative U.K.-based Web marketing “boutique” will be a huge asset for global advertising firm Cossette Communication Group of Quebec, according to Canadian media experts.

The C$21 million purchase of Dare Digital, which was announced by Cossette Wednesday, is expected to provide the Canadian company with a solid foothold on the European Web-based interactive advertising market.

“This is a big step for the Big Boy,” said Nick Dumitru, creative director of Basis, a full-service Web marketing firm headquartered in Toronto.

With over 1,500 employees in Quebec City, Montreal, Vancouver, Halifax, New York, Boston, Irvine, Los Angeles, London, Shanghai and Moscow, Cossette is recognized as one of the top 15 advertising firms in North America and among the 25 leading agencies worldwide. Its service offerings include: research, business to business communications, product placement, media planning and buying, public relations, urban and ethnic marketing.

Among Cossette’s top clients are: Alcan Primary Metal, Bell Canada, BMO Financial Group, McDonald’s Canada, the U.S. Coast Guard and Home Depot.

Founded in 2003, Dare Digital has a staff of 130 workers and a total gross income of roughly $20 million. It’s known for its humorous and often daring online ads for such companies as Barclay’s, Vodafone, Lynx and Sony.

Dumitru said the acquisition will round out Cossette’s offerings: “Now, Cossette can present clients around the world with a complete package from start to finish – print, TV and Web ads.”

While Cossette stands to gain a highly desirable addition to its stable of ad firms, Dare Digital will benefit from the Canadian company’s deeper pockets and clientele in North America.

Cossette has made three other London acquisitions in the past, but Dare Digital could be the last piece in the puzzle for the global firm’s recent European expansion.

“We have been looking for the right candidate for our U.K. link for the last 12 months,” said Claude Lessard, chairman of the board, CEO and president of Cossette.

He said Dare Digital won him over because of its “cultural fit” with Cossette and its “high potential in the international scene.”

The merger is actually a multi-staged, six-year process that began Tuesday with Cossette’s $21 million purchase of 65.4 per cent of U.K. firm, according to John Owen, planning partner of Dare Digital.

Remaining parts of Dare Digital will be bought by Cossette in the following years with the final option to be exercise in 2013. The deal is uncapped and total valuation will be based on future growth and profit margins which will be calculated using an agreed upon formula, said Owen.

Top executives and founding members of Dare will stay on.

The purchase is a feature of the “constant churn” within the Internet advertising industry according to George Goodall, senior analyst for Info-Tech Research Group of London, Ont.

“There appears to be a four year cycle of mergers and acquisitions in the space since 1999,” Goodall said.

Recently the buy-offs have been “characterized by Google’s push into the Web ad space and Microsoft’s purchase of digital media marketing company aQuantive.”

Goodall sees the purchase as a wise strategic move on the part of Cossette but hopes the smaller firm gets to “keep its cutting edge advantage.”

Comment: info@itbusiness.ca

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Jim Love, Chief Content Officer, IT World Canada

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