Exclusive: Gozoop Group acquires Stratton Communications; acquired agency will be rebranded as Sm(all) and will focus on challenger brands

• Gozoop Group has acquired its fifth agency, Stratton Communications.
• Stratton will be rebranded as Sm(all) and will operate independently within the Gozoop Group.
• We caught up with Ahmed Aftab Naqvi, CEO & Co-Founder, Gozoop Group, Rohan Bhansali, Co-Founder & Director, Gozoop Group and Siddhanth Valecha, CEO, Sm(all) to find out more about the alliance and Gozoop Group’s vision ahead.

The Gozoop Group has acquired Digital Agency Stratton Communications. This is Gozoop’s fifth acquisition. Before this, the group had acquired Red Digital in 2013, which is a part of the Dream11 Group, iThink in 2014, 56 Blue Lights in 2016 and Hat Media in 2018.

After the acquisition, Stratton will be rebranded as Sm(all) and will focus on challenger brands under Gozoop’s umbrella. The agency aims at gaining recognition for its ability to use human insights to unlock authentic brand experiences that drive meaningful engagements primarily on short-form content platforms. With Siddhanth Valecha as the CEO of Sm(all), the agency will operate independently within the group and will report to the Gozoop Board.

The group has already added clients such as Cipla, Regal Shoes, ExtraMile, Nasher Miles and Aster Labs in the last two months after the acquisition. Pre-pandemic, Stratton had earned Rs 2.5 crore in annual revenues and now, Sm(all) is only aiming to go bigger!

We caught up with Ahmed Aftab Naqvi, CEO & Co-Founder, Gozoop Group, Rohan Bhansali, Co-Founder & Director, Gozoop Group and Siddhanth Valecha, CEO, Sm(all) to further understand what the acquisition means for the group, what it is like to form an alliance during a pandemic and vision ahead.

Excerpts:

Q. Can you tell me a little bit about this acquisition? When did the talks begin?

Rohan: We have been on the lookout for a mid-size agency since mid-2020. The vision we were working towards was to have a second full-service agency as part of Gozoop Group.

We were introduced to Siddhanth in November 2020. Through Stratton, Siddhanth has helped build some strong challenger brands with bold marketing campaigns. Siddhanth is famous (or infamous as he would say) for the first pizza to be delivered by a drone in India. This campaign was done for a pizza brand that caught not only the attention of the media but also city authorities. We loved the boldness of it.

We had shortlisted three agencies as part of our search for a second agency. Amongst them, we saw the best creative and value fit in Stratton. In Stratton, we found a player that thrives on taking risks to break the marketing clutter.

The negotiations took a couple of months and we formalized the terms of the deal in February 2021.

Q. How will Stratton operate under Gozoop Group’s umbrella?

Ahmed: Stratton will operate independently within the framework of defined values and business principles of Gozoop Group. It has been rebranded as Sm(all) to be more in line with its vision of building challenger brands.

Sm(all) will have its own culture, which will be a derivative of Siddhanth’s leadership style. We feel that that’s a prerequisite for this venture to succeed. We don’t want it to lose its bold essence. In fact, we want to accentuate it.

Siddhanth: Stratton as a company, in its true element, was what initially attracted Rohan and Ahmed’s attention. Additionally, for me, staying true to our core as Stratton was also of utmost importance. Therefore, what’s made this even more comforting or rather seamless is that all three of us widely agreed on keeping the essence of Stratton, now Sm(all), in sync with what I had initially envisioned it to be. We will be operating independently under the Gozoop Group. And I couldn’t be more excited.

Q. What kind of synergies will Gozoop share with Sm(all)?

Rohan: At Gozoop, our ecosystem is set to best service brands such as Dell, Indian Hotels and Bisleri that are market leaders in their categories. Such brands obviously have different needs than challenger brands. With Sm(all), at a group level, now we can service such challenger brands that Gozoop earlier couldn’t due to non-compete as well as the size of business reasons.

The corporate side of the business – HR, Finance, IT – will have further synergies. While these will be centralized to benefit from the Group’s strong systems, specific subsystems have been set to better suit Sm(all).

Q. How will the alliance help strengthen your overall offering?

Ahmed: At a business level, we can monetize existing opportunities better as we can now service a wider array of brands. We earlier had to pass on these opportunities to other agencies. This will help revenue and bring down our overhead costs at a per employee level. As stated above, it will also lead to higher efficiencies in our horizontal functions such as HR, Finance, IT and PR.

At an execution level, Sm(all) brings its own unique and bold style of brand development that will build creative repute at the Agency as well as Group level. Stratton has been well known in the industry for bold creative campaigns. Expect some firework campaigns from the den of Sm(all).

Siddhanth: Gozoop is well known in the advertising industry for its culture and processes, therefore, collaborating in 3 major departments with a solid partner will only make things easier for us. It’ll help us focus on our key offerings of helping brands build a community and a narrative using our modern-day understanding and expertise.

Q. Who crafted the name of the agency Sm(all) and what was the idea behind it?

Rohan: That credit goes to Ahmed and Siddhanth, both creative geniuses. Initially, I personally thought we should stick to the name Stratton since it is well known. But now I see why Sm(all) aligns so sharply to the vision. Internally, it drives the team to leverage the power and bigness in the Sm(all). The counter intuitiveness of the name works well – Sm(all) is Strong. Sm(all) is Powerful. Sm(all) is Big. And our clients are resonating with it well too.

Q. Gozoop Group has acquired another agency during a global pandemic when the advertising industry is struggling to survive. What are some of the factors that have worked in your favour?

Ahmed: We have always been bottom line and cash flow focused. Such a mindset works better in economic down cycles. If you look back at our history, the genesis of Gozoop lies in the deep recession of 2008. Our focus since then is to build a resilient organization that has a strong fundamental moat.

It is the same resilience that enabled us to be the first advertising agency that announced performance appraisals in July last year when most agencies and networks were cutting headcounts. We had promised our team no COVID-related job losses as early as April 2020.

At Gozoop, we are always building for decades and we are ok to let go of short-term gain for long-term organization building. Like all businesses, our revenues too significantly suffered last year, but keeping the long in mind we wanted to protect our people.

Q. Considering this is Gozoop Group's first acquisition during a global pandemic, did you face any kind of challenges?

Ahmed: The only challenge if I can call it that is that most of our conversations happened over video calls. The funny part is Rohan and I haven’t yet met Siddhanth in person. That’s the new world for you. The pandemic has taught all of us to adapt and work with what we have.

Q. You've acquired four agencies so far. So, can you tell me what is it that you look for in your partner?

Rohan: Actually Stratton marks our 5th acquisition counting the one we did in Dubai. Inorganic growth through M&A has always been a part of our story starting with Red Digital in 2013, iThink in 2014, 56 Blue Lights in 2016, Hat Media in 2018, and now Stratton (2021).

In all these acquisitions, we first find a value synergy. In most of these acquisitions, the founder has been active in the business and hence a value alignment is critical. For eg. Yamini (founder of 56 Blue Lights) now leads our Gozoop Dubai operations.

Q. Can you give us a sense of the deal in financial terms?

Rohan: The deal is a mix of equity and cash with Gozoop owning a majority in the company. Like in most deals in our sector, the majority of the pay-out is based on the future cash flow performance of the business.

Pre-pandemic, Stratton has Rs 2.5 crore of annual Revenues. The business did take a hit in the pandemic since it was majorly focused on the hospitality and F&B sector. Today, we are well diversified amongst sectors and with the current pace of growth, we should soon outdo the pre-pandemic revenue numbers. Just in the last 2 months, we have added clients such as Cipla, Regal Shoes, ExtraMile, Nasher Miles and Aster Labs.

Sm(all) is going Big!

Q. Siddhanth, what is your vision for Sm(all) now as you begin a new chapter?

Siddhanth: Brands today don’t just need a customer base, they need a cult following that will stand with the brand, its offerings, and also its cause. Engaging and not just advertising is what I feel Sm(all) is here for.

The audience today, more than ever, is aware or even uncomfortable about the fact that with every swipe or scroll there is a product advertisement that’s waiting to occupy their screens. The need for an agency/marketing partner that can help weave a narrative that goes beyond just a seasonal ad campaign, is the need of the hour in my opinion. Sm(all) envisions to be the element of change that fills this void in the segment.