Share

by Herman Manson (@marklives) Vinny Lingham launched search-engine marketing software agency, Clicks2Customers, in 2003. It was an early entrepreneurial enterprise from the man who would later launch Yola and Gyft, and also star in the South African edition of The Dragon’s Den.

Clicks2Customers logoAttracted investment

At the same time as setting up Clicks2Customers, Lingham launched a holding company called incuBeta. By 2006, Click2Customers had become a significant search affiliate in the UK in the travel space. It would draw early investment from TEIM Ventures.

TEIM Ventures, with the Oppenheimers as shareholders, had made their money in the telecoms trade — when TEIM took a stake in Incubeta, the Oppenheimer Fund exercised its right to come in (it had right to follow any TEIM investment). TEIM had its own fund which looked at investments in smaller high-risk enterprises with high-return opportunities, of which incuBeta was one.

By 2005, the investment funds’ share in the business had grown from 25% to 51%.  Current Clicks2Customers CEO, Jonathan Gluckman, would later convert his shares in TEIM into Incubeta shares. By 2007, HBD had made a R25m investment in the company, which then had an annual turnover of R50m. It employed 50 people in Cape Town, Johannesburg and London. According to Gluckman, at the time of the Oppenheimer family investment, returns stood at a promised 40%.

Flying high

The company was flying high, and even talked about a listing on the JSE to help finance growth in the US and European markets. But, six months later, the business was virtually dead.

Agency networks had stepped into the market and search affiliates were at a distinct disadvantage — holding few or no direct client relationships themselves. The business lost 10 of its top 12 clients to agencies over the course of a year, losing R8m in 2007.

Gluckman, who was heading up global business development for Clicks2Customers at the time, realised that the company had to evolve into a fully-fledged digital agency if it were going to survive. Having spent time in the US and UK markets, Gluckman saw how digital outfits there were managing the cycle, which was already swinging away from ad agencies that were not delivering on the deep technical knowledge they had promised clients.

Set about reinventing

Gluckman set about reinventing Clicks2Customers as a performance agency, rather than as an affiliate agency, in a bid to go head to head with the big agencies. Clicks2Customers got lucky in that it quickly gained Walmart, Overstock and Zappos — all three top 30 retailers in the USA. It won these clients as they had gone through the same process of moving from the big affiliates to the large agencies, but found that the agencies couldn’t deliver same performance as the super affiliates, says Gluckman.

The reason is that search is a quantitative space, not qualitative. “However, we couldn’t get traction beyond the companies that knew us as an affiliate — and came back to us,” he adds.

Unfortunately, the US part of the Clicks2Customers was failing, in part due to a lack of staff on the ground, the competitive environment and that the business was backed by rands, not dollars. Gluckman thought its focus should shift to emerging markets.

The departure of Lingham

It was this belief, coupled with his attempts to transform Clicks2Customers into an agency, which eventually lead to the departure of Lingham. The investors then took control of Clicks2Customers in return for giving up several IncuBeta subsidiaries at the time. Both the Oppenheimer fund and HBD eventually divested from the business.

Clicks2Customers soon won the SEO account for South African Tourism and expanded its operations to Australia, shortly becoming that country’s leading retail search-engine marketing agency, winning the business for four of its top 10 online retailers.

In 2011, it opened in Asia and won the business of Standard Chartered Bank; it now does business across 14 Asian countries and has offices in Malaysia, Hong Kong, Singapore and Shanghai. It’s also back in the black.

Offices around the world

The agency’s engine room sits in SA, explains Gluckman, but it generates most of its revenues from outside of the country. Currently, Clicks2Customers has offices in Australia, the UK and the US, as well as its four Asian offices.

It’s the international business interests, especially in developed markets, which gives the agency an edge in its core developing markets, Gluckman believes. Digital is becoming less about search; instead, attribution modelling and user experience (UX) are gaining traction, especially in developed markets. Clicks2Customers is investing in these streams today to ensure it stays ahead in the digital game.

With R700 million in annual billings (turnover, not revenue), the agency has its legal headquarters in the UK. It employs 100 people in Cape Town and another 30 internationally. Data informs all decisions, and digital is viewed not as a branding channel but as an acquisition channel, according to Gluckman, who says that the agency has pushed spend into back-end systems, rather than the front-ends of campaigns.

In the pipeline

Its expansion into developing markets continues, with a new office having opened in Kenya in September 2014, as well as entry into Turkey. A number of other market entries are in the pipeline. Gluckman’s ambition is to build the largest search agency globally and he describes incuBeta as a global business built on SA expertise.

The agency has kept a relatively low profile inside South Africa, in part to protect itself from staff poaching. Gluckman says he has lost only one campaign manager to a ‘mainstream’ agency in the past decade.

Because SA has essentially been the driver for the agency’s global ambitions, the agency has not been as active as it perhaps should have been in building a local client base; this is set to change with the announcement of new country manager in the near term. Relationships have tended to be indirect — according to Gluckman, three of the country’s top five media agencies currently outsource search to Clicks2Customers.

Compete on more than price

He is critical of current local levels of SEO training, saying staff members at Clicks2Customers spend six months to a year in training before they take on accounts. He believes the country should compete on more than price; it should be competing on the depth of its skills base.

It’s also on depth of skills that specialist agencies such as Clicks2Customers will compete with full-service agencies in future. The latter are good at some things but not at everything — and, as the digital marketing environment becomes more sophisticated, he believes agencies such as his hold the competitive advantage.

— MarkLives’ round-up of top ad and media industry news and opinion in your mailbox every Monday and Thursday. Sign up here!

Share

Published by Herman Manson

MarkLives.com is edited by Herman Manson. Follow us on Twitter - http://twitter.com/marklives

Online CPD Courses Psychology Online CPD Courses Marketing analytics software Marketing analytics software for small business Business management software Business accounting software Gearbox repair company Makeup artist