Comments on: What the iCrossing Acquisition of Proxicom Says About the State of the SEM Industry http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html Internet Marketing News Fri, 10 Feb 2012 17:00:40 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: MktgDesign » Blog Archive » Interactive Marketing Company Overview – iCrossing http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-49634 MktgDesign » Blog Archive » Interactive Marketing Company Overview – iCrossing Tue, 10 Jun 2008 01:48:45 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-49634 [...] the US and Europe with a total of 620 employees. Their acquisitions of other firms has led some to speculate about slowing growth in search [...] [...] the US and Europe with a total of 620 employees. Their acquisitions of other firms has led some to speculate about slowing growth in search [...]

]]> By: Proxi Person http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-31619 Proxi Person Thu, 06 Sep 2007 16:13:22 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-31619 Proxicom annual revenue for 2006 was around 46 million. Good article, and lots of good analysis. iCrossing will definitely make money as a result of this purchase. But I question the longterm growth for corporate cultural reasons."Cross-Sell" is quite literally the company mantra (they even have to chant it!really!) and lets not forget that Herzog started out as a Banker. Proxicom annual revenue for 2006 was around 46 million. Good article, and lots of good analysis.

iCrossing will definitely make money as a result of this purchase. But I question the longterm growth for corporate cultural reasons.”Cross-Sell” is quite literally the company mantra (they even have to chant it!really!) and lets not forget that Herzog started out as a Banker.

]]> By: Sam http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-31522 Sam Tue, 04 Sep 2007 14:17:55 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-31522 Basing any analysis on revenue numbers that are 2 years old is just plain bad analysis. I understand that you only had limited information, but maybe in the very least you should have projected iCrossing's current revenue at their historic growth rates. In the SEM industry, 2007 is very different from 2005. Basing any analysis on revenue numbers that are 2 years old is just plain bad analysis. I understand that you only had limited information, but maybe in the very least you should have projected iCrossing’s current revenue at their historic growth rates. In the SEM industry, 2007 is very different from 2005.

]]> By: Tim Lang http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-30232 Tim Lang Thu, 09 Aug 2007 06:33:46 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-30232 I agree that the SEM Markets have become tighter but due to increased level of specialty SEM companies. I was with ic early and can say that they are smart to buy firms and then cultivate relationships, but ultimatley sell big. In the last three years competition has grown considerably as with In-House SEM teams trained by Google or related firms. It is mainly competitive saturation but also web development and SEO should be combined as they remain largly seperated. I do, in my opinion, think their sales efforts were and are not strong and for their competitors it is NOW time to attack their markets while they work to combine interactions of companies they aquired. If specialty SEO companies see this as there chance to compete for the ic markets, then these aquisitions might only turn out to be subsistence in the long run. iRecon I agree that the SEM Markets have become tighter but due to increased level of specialty SEM companies. I was with ic early and can say that they are smart to buy firms and then cultivate relationships, but ultimatley sell big. In the last three years competition has grown considerably as with In-House SEM teams trained by Google or related firms.

It is mainly competitive saturation but also web development and SEO should be combined as they remain largly seperated.
I do, in my opinion, think their sales efforts were and are not strong and for their competitors it is NOW time to attack their markets while they work to combine interactions of companies they aquired.

If specialty SEO companies see this as there chance to compete for the ic markets, then these aquisitions might only turn out to be subsistence in the long run.

iRecon

]]> By: In Anchor » iCrossing Acquires Proxicom After $62 Million Funding http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-30197 In Anchor » iCrossing Acquires Proxicom After $62 Million Funding Wed, 08 Aug 2007 16:29:28 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-30197 [...] at Marketing Pilgrim looks at the other firms they have recently acquired and speculates that iCrossing is on a value building [...] [...] at Marketing Pilgrim looks at the other firms they have recently acquired and speculates that iCrossing is on a value building [...]

]]> By: Search Marketing Digest - Interesting Items Written the Week of July 30, 2007 - KoMarketing Associates http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29968 Search Marketing Digest - Interesting Items Written the Week of July 30, 2007 - KoMarketing Associates Fri, 03 Aug 2007 21:01:33 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29968 [...] Industry NewsOn Monday, Marketing Pilgrim reported on iCrossing’s acquisition of web development firm Proxicom, the latest in a string of purchases by the company this year. The [...] [...] Industry NewsOn Monday, Marketing Pilgrim reported on iCrossing’s acquisition of web development firm Proxicom, the latest in a string of purchases by the company this year. The [...]

]]> By: Ryan http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29917 Ryan Thu, 02 Aug 2007 20:05:35 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29917 Meg & Janet it isn't fair to assume that the purchase price required the entire $62M, in fact the article that you link to from azcentral.com suggests that only a portion of the $62M raised primarily from Goldman Sachs was used to complete the transaction. It is difficult to discerne how much revene is generated from Proxicom versus iCrossing. There have been three other transactions since December, all of which added incremental revenue to the published 2005 number. The combined entity now is at a point where the total revenue between 4 additional companies (including Proxicom) and iCrossing generate a total of $100M in annual revenue. Meg & Janet it isn’t fair to assume that the purchase price required the entire $62M, in fact the article that you link to from azcentral.com suggests that only a portion of the $62M raised primarily from Goldman Sachs was used to complete the transaction.

It is difficult to discerne how much revene is generated from Proxicom versus iCrossing. There have been three other transactions since December, all of which added incremental revenue to the published 2005 number.

The combined entity now is at a point where the total revenue between 4 additional companies (including Proxicom) and iCrossing generate a total of $100M in annual revenue.

]]> By: iCrossing Acquires Proxicom After $62 Million Funding http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29875 iCrossing Acquires Proxicom After $62 Million Funding Thu, 02 Aug 2007 06:19:04 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29875 [...] at Marketing Pilgrim looks at the other firms they have recently acquired and speculates that iCrossing is on a value building [...] [...] at Marketing Pilgrim looks at the other firms they have recently acquired and speculates that iCrossing is on a value building [...]

]]> By: Bubalu http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29863 Bubalu Wed, 01 Aug 2007 21:29:29 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29863 AdAge's annual agency report puts iCrossing's 2006 revs at $63M. Remember, all those companies they bought are producing new revenue. Granted, I think those numbers are guesses on Adage's part. AdAge’s annual agency report puts iCrossing’s 2006 revs at $63M. Remember, all those companies they bought are producing new revenue. Granted, I think those numbers are guesses on Adage’s part.

]]> By: Janet Driscoll Miller http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29847 Janet Driscoll Miller Wed, 01 Aug 2007 17:29:46 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29847 Meg, good point. I'm not sure what their 2006 revenue is, and because they are private, they are not required to file that number publicly. If we assume, however, that a growing business on the track that iCrossing has been on would have at minimum maintained it's 2005 revenue in 2006, if not gained, then it's not misleading necessarily, but rather futher proves the point at hand -- SEM growth in large scale accounts is flat. Remember that Goldman Sachs and others gave iCrossing $62M for this acquisition to happen. And it would be highly unlikely that Proxicom, a financially solvent business, would sell the company for a dollar figure less than it's annual revenue figure. $100M (new combined revenue) - $62M (GS funding) = $38M. $38M is what iCrossing had to come up with to buy Proxicom. Assuming that iCrossing did not spend its last dime to acquire, then yes, they would have some growth from 2005 to 2006. But likely it was not much, considering that the new combined revenue is $100M. In fact, I might argue that the growth appears that it could have been SO flat that this acquisition was necessary to boost the revenue for 2007 after a year of no growth. Meg, good point. I’m not sure what their 2006 revenue is, and because they are private, they are not required to file that number publicly.

If we assume, however, that a growing business on the track that iCrossing has been on would have at minimum maintained it’s 2005 revenue in 2006, if not gained, then it’s not misleading necessarily, but rather futher proves the point at hand — SEM growth in large scale accounts is flat.

Remember that Goldman Sachs and others gave iCrossing $62M for this acquisition to happen. And it would be highly unlikely that Proxicom, a financially solvent business, would sell the company for a dollar figure less than it’s annual revenue figure.

$100M (new combined revenue) – $62M (GS funding) = $38M. $38M is what iCrossing had to come up with to buy Proxicom. Assuming that iCrossing did not spend its last dime to acquire, then yes, they would have some growth from 2005 to 2006. But likely it was not much, considering that the new combined revenue is $100M. In fact, I might argue that the growth appears that it could have been SO flat that this acquisition was necessary to boost the revenue for 2007 after a year of no growth.

]]> By: Meg http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29844 Meg Wed, 01 Aug 2007 17:12:29 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29844 interesting analysis, but the numbers are a bit misleading -- in that you're taking iCrossing's 2005's revenue total ($31M) and then calculating a 219% increase "overnight". What happened to 2006? interesting analysis, but the numbers are a bit misleading — in that you’re taking iCrossing’s 2005′s revenue total ($31M) and then calculating a 219% increase “overnight”. What happened to 2006?

]]> By: HELM, WHM/cPanel, Windows, Linux and SEO Blog » Blog Archive » iCrossing Acquires Proxicom After $62 Million Funding http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29839 HELM, WHM/cPanel, Windows, Linux and SEO Blog » Blog Archive » iCrossing Acquires Proxicom After $62 Million Funding Wed, 01 Aug 2007 15:58:42 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29839 [...] at Marketing Pilgrim looks at the other firms they have recently acquired and speculates that iCrossing is on a value building [...] [...] at Marketing Pilgrim looks at the other firms they have recently acquired and speculates that iCrossing is on a value building [...]

]]> By: Six Degrees Of Separation Anxiety http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29807 Six Degrees Of Separation Anxiety Tue, 31 Jul 2007 21:03:54 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29807 [...] Even more interesting, the perspective offered by Janet Driscoll Miller of Marketing Pilgrim: What the iCrossing Acquisition of Proxicom Says About the State of the SEM Industry. [...] [...] Even more interesting, the perspective offered by Janet Driscoll Miller of Marketing Pilgrim: What the iCrossing Acquisition of Proxicom Says About the State of the SEM Industry. [...]

]]> By: Wil Reynolds http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29789 Wil Reynolds Tue, 31 Jul 2007 14:10:03 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29789 I have been feeling this too. I have a friend who works at a big ad agency who was managing one of the large accounts for an automaker, and he tried and tried to get us in, but the VERY large agency in one of those big groups like WPP, had recently bought a search firm. I think the BIG guys are realizing that their 30+ agencies are individually sending out search work to many different companies and just said, we're going to buy ONE! This works for the Search agency because they have to be feeling the squeeze on SEM growth now that people are becoming more educated and more likely to bring this stuff in house. Good post, thanks! I have been feeling this too. I have a friend who works at a big ad agency who was managing one of the large accounts for an automaker, and he tried and tried to get us in, but the VERY large agency in one of those big groups like WPP, had recently bought a search firm. I think the BIG guys are realizing that their 30+ agencies are individually sending out search work to many different companies and just said, we’re going to buy ONE!

This works for the Search agency because they have to be feeling the squeeze on SEM growth now that people are becoming more educated and more likely to bring this stuff in house.

Good post, thanks!

]]> By: Andy Beal http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29785 Andy Beal Tue, 31 Jul 2007 12:42:43 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29785 Great analysis Janet. When I left WebSourced in 2005, I predicted we'd start to see consolidation within 2 years. @ Adam - perhaps the best phrase is - the growth of SEM is shrinking. ;-) Great analysis Janet. When I left WebSourced in 2005, I predicted we’d start to see consolidation within 2 years. @ Adam – perhaps the best phrase is – the growth of SEM is shrinking. ;-)

]]> By: Derek http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29782 Derek Tue, 31 Jul 2007 11:47:57 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29782 Interesting points. I've never worked for a larger agency but my sense would be more along the lines of Adam's statement that the rate of growth in the SEM market is slowing - specifically for a company of that size. There are only so many "big fish" that (I would have to imagine) ICrossing would work with - but that's my own speculation. That being said, perhaps the investment in, and rate of acquisitions, by ICrossing's signifies that Search Engine Marketing is really being recognized as an integral part of a company's marketing strategy. I feel that as search engines improve how they index and rank pages, more and more companies interested in hiring an SEM firm will need/expect a more well-rounded suite of services (or at least the potential for those services) from their vendor - which means that either the SEM shop gets acquired by the larger agency or (in this case) the SEM shop has the resources to add to their own portfolio of offerings. Interesting points. I’ve never worked for a larger agency but my sense would be more along the lines of Adam’s statement that the rate of growth in the SEM market is slowing – specifically for a company of that size. There are only so many “big fish” that (I would have to imagine) ICrossing would work with – but that’s my own speculation.

That being said, perhaps the investment in, and rate of acquisitions, by ICrossing’s signifies that Search Engine Marketing is really being recognized as an integral part of a company’s marketing strategy.

I feel that as search engines improve how they index and rank pages, more and more companies interested in hiring an SEM firm will need/expect a more well-rounded suite of services (or at least the potential for those services) from their vendor – which means that either the SEM shop gets acquired by the larger agency or (in this case) the SEM shop has the resources to add to their own portfolio of offerings.

]]> By: Adam C http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html/comment-page-1#comment-29777 Adam C Tue, 31 Jul 2007 08:25:24 +0000 http://www.marketingpilgrim.com/2007/07/what-the-icrossing-acquisition-of-proxicom-says-about-the-state-of-the-sem-industry.html#comment-29777 "The SEM market is shrinking" is not the same as "the rate of growth in the SEM market is slowing". I feel the second statement is the far more realistic of the two. In my experience demand is as high as ever. Most large companies are engaged in search marketing, though many change agencies and move back to agencies when in-house projects don't live up to expectation. Having a web dev agency as part of the group gives great cross selling potential and brings a competitive edge that pure SEM agency or pure web dev doesn't have. “The SEM market is shrinking” is not the same as “the rate of growth in the SEM market is slowing”. I feel the second statement is the far more realistic of the two. In my experience demand is as high as ever. Most large companies are engaged in search marketing, though many change agencies and move back to agencies when in-house projects don’t live up to expectation.

Having a web dev agency as part of the group gives great cross selling potential and brings a competitive edge that pure SEM agency or pure web dev doesn’t have.

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