AKQA Acquires Search Agency

Amidst the popping of champagne corks at the SearchRev booth at SES San Jose yesterday, SearchRev announced it has been acquired by online marketing firm AKQA for an undisclosed sum.

The search engine marketing company will remain a separate division within AKQA and will work with the agencies’ approximately 40 clients “to enhance their search marketing advertising, which will in turn enhance all of their advertising,” said Eduardo Llach, CRO, CMO and co-founder of SearchRev, at the show.

“What this acquisition is saying is brand advertising needs search advertising. For all your advertising, you need to figure out and get the search working well. If you do that, everything else you do will be working better. If you don’t then you’re wasting money on anything else you’re doing,” said Llach. “You have to nail down and get the search advertising optimized for your branded terms.”

The acquisition is a step forward in AKQA’s battle plan to create a “next generation creative agency” which will include further acquisitions and an expectation of the company going public next year, Llach said. AKQA had a majority stake taken by General Atlantic earlier this year, and it’s expected that the company is attempting to follow in aQuantive’s footsteps, by collecting technology and services for a combined marketing solution.

“For us, it’s about building a next-generation digital marketing agency that our customers are going to be trusting with more and more work and deeper relationships,” said Bedecarre. “We think that is going to create a lot of value. By next year, we are going to be of a size that it will be very attractive to be a public company.” The CEO insisted he is not trying to build AKQA in order to have it gobbled up by a bigger fish like the Microsoft acquisition of aQuantive, which resulted in the formation of an Advertiser and Publisher Solutions Group.

With the addition of a search platform and goals of future acquisitions, AKQA addresses issues of conflict of interests. While this is especially problematic when publishers acquire ad agencies, it’s also something AKQA might face with the SearchRev deal. Because SearchRev sells its SEM optimization software to other agencies, AKQA is being careful to erect a wall of separation. In announcing the acquisition, AKQA stressed that SearchRev will remain semi-independent and continue “providing professional services and technology licenses to both advertisers and agencies” other than AKQA. SearchRev will continue to be based in its offices in Palo Alto, CA.

“I think its important for SearchRev to be a stand-alone business because it’s a company that developed a software tool to optimize search and, in addition to marketing that to clients… they also license the tool to other agencies,” AKQA CEO Tom Bedecarre said. “It’s a similar situation to when aQuantive owned Atlas and they were selling the Atlas tool to agencies that were competitive to Razorfish. We want to make sure the platform and technology part of the business is separate and distinct.”

Bedecarre acknowledged that “the lines are blurring between who’s doing what for whom,” when it comes to publishers, networks and agencies, but it shouldn’t disrupt the success of his company.

He said SearchRev is a perfect fit for AKQA and, in a statement discussing the acquisition Bedecarre said the deal announcing the deal is AKQA’s “first step in creating the next generation digital marketing services network.” Bedecarre said SEM will be a major ingredient of that process. “AKQA has been focused on large global advertisers as our clients and what we’ve found is that search is an increasingly important part of the mix for large, global advertisers,” he said.

According to AKQA, SearchRev’s technology consistently doubles its client’s revenues and increases their profits by an average of 52 percent. In addition to licensing its SEM tools, the Silicon Valley company also manages big SEM campaigns Coca-Cola, Yahoo, Shutterfly, Real Networks, Safeway and other large enterprises.

SearchRev and AKQA were introduced through their mutual customer Coca-Cola, as the agency was tasked with interactive advertising for Coke, while SearchRev worked on optimizing the MyCokeRewards campaign, said Llach.

“What happened was before we came in [Coke] didn’t have a search campaign set up directly. We tripled the number of people that registered for their site, through their branded terms,” he said.

Additional reporting contributed by Fred Aun.

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