On May 17 France-based Publicis Groupe announced that it will acquire its strongest competitor in North America, Hamilton-based Rosetta for $575 million. According to Publicis, the acquisition is likely to add 30 percent to the revenue it derives from digital marketing.
Rosetta will remain an autonomous entity and Chris Kuenne, the company founder, will stay on as its leader. According to Publicis, Rosetta’s manager-shareholders can receive a deferred payment in 2014 that will be based on Rosetta’s performance through 2013. The deal is expected to close by the end of June.
Also according to Publicis, the deal is a preamble to the day the Internet overtakes newspapers as the second-largest marketing platform (behind television). Long expected, the position shift is expected to occur in 2013.
Publicis operates several subsidiaries under Publicis Selling Solutions in Yardley, as well as Publicis Healthcare Recruiting and Publicis Healthware International at 2000 Lenox Drive. In the past few years Publicis and Rosetta have been in a foot race to acquire companies in the digital marketing field until they became two of the largest such entities in North America. Publicis had acquired Digitas and Razorfish, two other major names in the industry, as Rosetta acquired numerous small and mid-size companies on its own.
Its latest addition was Level Studios, based in California, which Rosetta acquired for an undisclosed amount last fall.
Rosetta began in 1998 as Rosetta Marketing Strategies Group, under the umbrella of Nelson Communications. In 2000 Kuenne and a partner bought themselves out of Nelson.
The agency quickly became a marketing firm that eschewed traditional television and print outlets in favor of digital and online marketing. Six years ago the firm employed 40 and had revenues of about $10 million. After Kuenne and Rosetta went on a buying spree that included New York-based Wishbone (a 2009 deal that scored Rosetta such clients as Novartis, Otsuka, and Pfizer) the company’s revenues grew to $150, then to $250 million. The company now employs 1,100.
Kuenne attributes Rosetta’s success to the company’s laser-focus approach (U.S. 1, March 3, 2010). An example comes from Rosetta’s campaign to boost sales of the over-the-counter headache medicine Excedrin. Research showed that people who take Excedrin want the most aggressive way to “nuke” their headaches. That, Rosetta learned, was only about 18 percent of OTC pain medication users. Rosetta’s advice: Forget the other 82 percent and zero in on the small clique of Excedrin users. The result: nearly half of Excedrin purchases are made by that 18 percent.
Kuenne also attributes Rosetta’s success to its focus on the right clients — marquee names like Johnson & Johnson that will cause other companies to “jump on the bandwagon,” he says.
Kuenne says he learned his approach to life and work from his father, late Princeton University professor Robert Kuenne, who studied economic systems and frequently counseled his son on such matters.
“My father proved that it would be in everyone’s best interest to work in implicitly coordinated fashion, operating carefully to avoid throwing the system out of equilibrium,” he said.
Before starting Rosetta, Kuenne had done consulting work in New York. Before that he worked for Johnson & Johnson. There he met Jim Burke, the company’s chairman, who became his second mentor.
Though Kuenne will stay in charge of Rosetta, he will answer to the COO of Publicis Groupe in Paris. Kuenne said of the sale: “We recognize that in order to achieve our long term business and geographic growth potential, we need the reach and resources of a global group.”
#b#Rosetta#/b#, 100 American Metro Boulevard, Suite 201, Hamilton 08619; 609-689-6100; fax, 609-631-0184. Christopher B. Kuenne, president. www.rosettamarketing.com