As revenues plummet and budgets tighten, advertising is often one of the first areas to be sacrificed. That’s not stopping Paris-based media and online advertising group Hi-media.
As revenues plummet and budgets tighten, advertising is often one of the first areas to be sacrificed. That’s not stopping Paris-based media and online advertising group Hi-media.
David Barnard, COO of Hi-media, comments: ‘Internet is an essential medium. That’s not because it’s fashionable. It’s because more people are connected and they spend more time online than ever before. It really is a mass media.’
The company reported revenue of €135 million (£116.8 million) in 2008 and Barnard is confident there is more to come: ‘Advertising is struggling and it’s certainly had an effect, but our micropayment business, in which we provide a technical platform that enables businesses to charge for access to a website, has grown by 50 per cent. We have a positive cash flow and we are one of the few companies that have increased revenues and EBITDA in 2009.’
AdLINK success
The company’s success has enabled it to go on the acquisition hunt. In June, Hi-media acquired AdLINK Media, the Germany-based display advertising division of AdLINK Internet Media AG, for €29.4 million (£25.4 million).
Barnard explains: ‘The two companies are highly complementary. Geographically, we didn’t have a presence in the Netherlands and the UK and they didn’t have a presence in Spain and Portugal. We were constantly fighting for market share.
‘It was absolutely essential to secure a place in London. Most international advertising agencies are based in London. If you don’t have an audience in the UK, you can’t pitch European campaigns.’
However it wasn’t only the London address that attracted Hi-media: ‘When times are bad, advertisers and media buyers tend to concentrate on the six or seven biggest players in the industry and other companies don’t get a chance, so it’s important to increase market share.’
Although the deal was funded by shares and a vendor loan, Barnard insists bank finance was also an option: ‘We have a financial structure in place to raise more money from the bank, and we could have done so quite easily. We used a vendor loan because it was 100 per cent secured, so if we put the call in, we could raise extra capital, with no questions asked.’
Barnard argues it is getting easier to raise money for deals: ‘The situation is better than it was six months ago. Banks are lending to companies that are showing resilience to the crisis… The crisis has been difficult, but it won’t last ten years. The advertising market is cyclical, so it goes through a rough patch, but it will catch up and grow quickly again.’
