Rapid Agency Growth that Led to a Lucrative Acquisition Offer with Daniel James | Ep #609

How do you get noticed by big brands? And eventually, get noticed by big agencies for an acquisition offer? It's all about making decisions that put the client first. That is what this guest shares in his story about starting out in the early days of social media, finding a hole in the industry,  and how his agency's rapid growth led to an unexpected acquisition offer.

Daniel James is the founder and CEO of Mint Performance Marketing, a growth agency working with brands that take a strong stance. His team helps brands build their business profitably with integrated omnichannel growth marketing execution. He’s led marketing strategies for AOL, Toyota, Disney, and more. His agency saw rapid growth, getting to seven figures within a year, and caught the eye of the global agency group Social Chain, which acquired it in 2019. He'll now discuss how the acquisition conversation started, how he estimated a fair value for his agency, and much more.

In this episode, we’ll discuss:

• Running a full-service agency to have a bigger impact on brands.
• How to use influencer marketing for your agency.
• The importance of customer experience to create loyalty.
• How the acquisition conversation started and how he justified his valuation number.

 

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

Podcast Takeover!!

Get to know your Smart Agency Guest Host: Dr. Jeremy Weisz is the co-founder of Rise25, an agency that helps companies launch and run podcasts profitably. He followed Jason’s podcast and eventually joined the mastermind and has been a guest on the podcast before. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and getting a new perspective on the show.

 

The Evolution of Social Media from it's Beginnings

Daniel has been in the digital space for a long time, beginning as a MySpace employee. At that time, MySpace was one of the first recognized social media platforms that really took off. For Daniel, it was a blast working there feeling the excitement of what they were helping build. It was a very creative environment where they were encouraged to do innovative things.

MySpace was always a creative community where you would code your own page. Later on, companies like Facebook took over with a more user-friendly communication tool. From that point, the platform struggled although it still exists today.

All in all, it was an amazing opportunity to visit Los Angeles and work with the MySpace team there. That is when he decided to move to LA and run his own marketing agency.

Finding a Gap in the Market to Have a Bigger Impact on Brands

Daniel didn’t study marketing but was lucky to have a solid formation from the people around him and working on different big brands. After a while, he wanted to have a bigger impact on brands and noticed a gap in the communication between different agencies all working on the same brand. This inspired him to start his agency, Mint, with a vision of being a full-service agency for disruptive ecommerce brands.

As an agency, they don’t try to cover absolutely every service. For instance, they don’t do SEO. However, in their core focus of acquisition and retention Daniel strives to offer a full and non-fragmented service.

One of his current clients was working with several agencies until recently. Although it worked for him, it meant he had different teams for CRM, influencer, social, and Google. Instead, having now all those teams under the same umbrella means they work cohesively to drive the most efficient, scalable, and profitable performance.

The Do's and Dont's of Influencer Marketing

Daniel’s agency uses influencer marketing to harness creative’s connections with their audiences. What brands normally want from influencers is a person-to-person connection to their audience. In his opinion, influencers do a great job because they’re contextually relevant to the platforms. People respond better to a familiar face than to stylized commercial content (although there is a place for commercial content). The influencer approach increases the chances of content being viewed as not just an ad.

Daniel’s agency prefers to provide a script however they're careful not to restrict the influencer. They’ve already figured out a way to engage their audience. That said, it doesn’t mean they’ll be great at getting your message across. This is why they provide guidelines that still allow creative freedom and improves the chances of success.

Influencer marketing is about community first. The worst mistake Daniel has seen when it comes to using influencer marketing is when people don’t think through the community element. Are they relevant to the brand? Are they engaged? Is it the type of community you want to tap into?

 

How the TikTok Algorithm Favors Influencer Marketing

TikTok influencers are growing and becoming mainstream celebrities at impressive speeds. What is it about TikTok that helps them grow so much? For starters, it still has organic reach so you can actually establish yourself and build an audience. Additionally, the production levels required to be successful are lower. Because of this, the platform is very attractive to creators and it’s easier to attract an audience.

For Daniel, the production level you want for your influencer campaign depends on what you’re trying to achieve. You don’t need to spend a lot of money on highly stylized video content on TikTok. This doesn’t mean you shouldn’t invest in video production. However, for brands trying to tap into TikTok and video, they can go for less stylized productions and get great results.

There’s a place for both. It’ll all depend on what your goal is and what’s native to the platform and doesn’t feel out of place.

The Important of Good Customer Experience to Create Loyalty

Generally, you never want to pay to acquire a customer more than once which is why there is a huge focus on retention.

This is even more important now in an economic climate of inflation and a recession. Consumers will be pickier about where they put their money and demand more from brands. Brands must pay attention and really go above and beyond to keep existing customers engaged.

What’s a good customer experience? There are certain elements that contribute to a good customer experience. There’s a good level of communication upon purchase, shipping speed, and how the brand is following up with the consumer. Things like VIP programs, loyalty points, subscriptions, etc. are ways to encourage repeat purchases.

Daniel is a big believer in making the product unpacking shareable. If your product arrives in a normal package then OK. People will open it and use it. However, if it arrives in a cool package with a thank you note and stickers, then customers are likely to take a picture and post it on social media. This customer experience creates free, word-of-mouth advertising.

How They Got to a Fair Validation that Satisfied Both Parties

Daniel already knew Social Chain owner Steven Barlett from meeting at events yet the eventual conversation about an acquisition came as somewhat of a surprise to him. At this point, the agency was just two years old.

Social Chain had built its business and name working on very creative campaigns around brand awareness. They tapped into social media as more of a communication tool and never had a performance element to what they did. They were now looking to marry brand marketing with performance marketing.

Daniel felt this was a great opportunity and converging those two worlds of brand and performance has always made sense from a consumer perspective and in terms of efficiencies.

When it came time to talk numbers, the estimated valuation depended on a number of factors. It was heavily tied to EBITDA. It was also tied to whether or not the business was growing, profitability, length of contracts, forecastable revenue, and composition of the team (the value will be less for agencies that are freelancer/contractor-only agency).

His agency had established employees, had forecastable revenue, and was profitable. All these things aided him in getting a good valuation. Furthermore, it was important for him to retain control because it wasn’t a cashout for him. They were barely starting and the acquisition was more about a strategic alliance.

Do You Want to Transform Your Agency from a Liability to an Asset?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program enables you to take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.