Harte Hanks Acquires 3Q Digital – Read the Inside Story Here!
Published: March 16, 2015
Author: David Rodnitzky
Today I am excited to announce that 3Q Digital has been acquired by Harte Hanks, a leading marketing services organization. In this post, I’ll do my best to share our rationale behind this acquisition and give you a hint of what you can expect in the future from the combined firepower of 3Q and Harte Hanks.
It All Started in a Coffee Shop in Pacifica . . .
I’ve already detailed the history of 3Q Digital in a blog post I wrote to commemorate our name change from PPC Associates to 3Q Digital. Suffice to say, when I started 3Q Digital (initially known as “PPC Ad Buying”) I saw it as a great lifestyle business – something I could do while I helped take care of my newborn and played some online poker!
What I quickly realized, however, as more and more people reached out to me for online marketing help, was that there just weren’t a lot of great agency options out there for hard-core direct-response SEM support, especially at scale. Back in 2008, most superstar SEM pros did one of two things: become a VP of marketing in-house (my job in 2007) or become a one-person affiliate or consulting shop (the lifestyle business I had initially envisioned).
So I started building PPC Associates in 2009 to try to fill this void. In the last six years, we’ve had a good run. Some of the highlights of which I’m particularly proud:
– 2010: Our first office, 660 square feet in San Mateo, CA!
– 2012: We started offering display and Facebook marketing
– 2013: Name change to 3Q Digital. SEO services offered
– 2014: We reached the 100-team-member mark and acquired iSearchMedia
– 2015: Mobile acquisition team launched. More than $300 million of spend under management
So Why Sell?
The decision to sell a company is difficult for many reasons – some emotional, some financial. Ultimately, my decision to accept an acquisition offer was based on the same criteria I’ve always used in running the company:
1. Is this good for clients?
2. Is this good for team members?
3. Is this a smart financial decision?
This acquisition met all three criteria. Firstly, as I’ll explain below, I believe the combined offerings of 3Q and Harte Hanks will benefit clients immensely. For team members, this acquisition will enable them to work with a greater diversity of clients, and learn new channels and technologies. Given that our team loves learning new stuff, I think this will be a fun ride for them. And financially, I feel we got good value for the company. While we aren’t a vaunted Silicon Valley unicorn (we’re more of a feeble pony), this transaction certainly seems very fair.
I also think that smart entrepreneurs sell a little too early rather than a little too late. Over the last 15 years in Silicon Valley, I’ve observed an amazing trait of many highly successful entrepreneurs: in the early stages of a business, the entrepreneur is incredibly pig-headed. He or she refuses to listen to the well-intentioned advice of their peers (which usually amounts to . . . “get a real job!”) and pushes forward anyway. Then, at some point, after the company has achieved a certain level of success, these formerly obstinate founders realize that they’ve accomplished all they can on their own and ask for help. Sometimes this means bringing in professional management (as was the case with both David Filo and Jerry Yang at Yahoo and Larry Page and Sergey Brin at Google), and sometimes this results in an acquisition (there are just too many to mention here).
3Q has grown by over 40% per year since inception, and our entire team deserve credit for our amazing trajectory. We are now at a stage, however, where we are starting to bump up against giant holding companies for business. I was on a panel recently with some of these firms and I quipped that my co-panelists’ companies had more janitors than we had team members. To compete against 40,000-person agencies, 3Q needs to demonstrate that we are a “safe” and “scalable” solution. Harte Hanks is an established leader in integrated, multichannel marketing – our partnership with Harte Hanks will give us the gravitas to win clients that might have previously shied away from a “boutique agency.”
Why Harte Hanks?
I truly believe in the work we do at 3Q Digital. We work with amazing companies that deserve incredible marketing results. There are a lot of great agencies out there, but there are also a lot of not-so-great agencies as well. Every time a company chooses 3Q Digital as their agency, I believe we are ‘saving’ them from potentially working with a bad agency.
So the more I can grow 3Q Digital, the more companies I can help. I believe 3Q is at a point where partnering with a larger, more diversified company is necessary to drive exponential growth. And Harte Hanks is particularly well-positioned to not only offer us scale, but offer additional services and technology that will be vital to our future success. I’ve seen three emerging trends in marketing over the last few years, and Harte Hanks helps us capitalize on each of these trends:
1. Customers Want Integrated Marketing.
I have believed for some time that “single channel” online marketing agencies will struggle in the future. There are simply too many channels out there for a company to have a separate agency for each one. 3Q already offers SEM, SEO, programmatic display, paid social, mobile marketing, video, and analytics. Harte Hanks offers many complementary channels that we are excited to start offering to our clients.
For example, imagine running an awesome retargeting campaign that coincides with both an email and targeted direct mail campaign – 3Q and Harte Hanks can do that. How about an awesome customer acquisition strategy on Google and Facebook, followed up by equally awesome post-acquisition retention marketing through a call center – we can now do that too.
2. Agencies Need to Be Technology Intermediaries.
The diversity of marketing technology companies operating today is overwhelming – so much so that numerous companies have created infographics trying to explain the universe (soon, someone may need to create an infographic of all the infographics about ad tech)! 3Q has already partnered with a myriad of tech vendors including SEM campaign management, Facebook management software, a DSP, a DMP, an ad server, business intelligence software, a tag manager, an attribution partner, and more.
For most in-house marketing teams, it is impossible to choose, implement and manage all of this technology. I believe that agencies must fill this void and proffer ad tech solutions to their clients. On top of what 3Q has already done in this space, Harte Hanks has developed an enterprise data management platform called Trillium Software that includes predictive analytics, business intelligence, CRM-integration, marketing automation and more. I think of this as a single platform through which data can be ingested and reformatted into actionable chunks. My hope is that the combination of 3Q’s existing technology vendors with Trillium’s integrated solution gives our clients more and better actionable data than they could get from any other agency.
3. It’s Not Just About Services; It’s Not Just About Tech; It’s About Both.
What do you get when you combine multiple channels, heavy tech integration, a suite of services that goes beyond media buying that starts to touch customer support and retention? The punchline is something other than an agency. We are seeing a sea-change in the marketing world that is bringing tech and agency services together into one cohesive offering. Harte Hanks, along with companies like Acxiom, Merkle, TeleTech, and Adobe are building combined service and tech stacks that position agency services as a part (albeit an important one) of a much bigger picture. The vision here is to be able to offer end-to-end customer acquisition, support, and retention, online and offline, through services and technology, in one integrated package.
I am certain that the large holding companies will invest heavily in tech to address this trend, and there will probably be some that successfully build an integrated marketing offering. Independent agencies, however, will be challenged to compete against these integrated solutions, because they lack the technical know-how and financial resources to develop tech at the right level of sophistication.
As I noted above, 3Q has been moving in this direction, with our expansion into additional marketing channels and significant investment in technology partnerships. Joining forces with Harte Hanks, however, puts us on a level playing field with the biggest players in the industry. And to paraphrase Kent Brockman, if you can’t beat ‘em, join ‘em!
Postscript: What’s Next and The Next Beer Is on Me
What’s next for 3Q, a Harte Hanks company? Well, we’ve got aggressive goals for the next few years so expect to see more hiring, more services, and, well, more, more, more! In case you are wondering, I’m not going anywhere – I’ve made a multi-year commitment to Harte Hanks to continue to run and grow 3Q Digital, as has most of our executive team. And we’re going to do everything we can to make sure our existing clients and team members are excited to stick around as well. So our hope is to maintain the foundation that made us awesome, and build on top of that to become an even greater company.
One thing I’ve noticed in Silicon Valley is that many entrepreneurs seems to confuse being lucky with being smart. I’m not one of those people. I see the success of 3Q Digital as a combination of luck, hard work, and smarts. Our growth certainly hasn’t been linear, and I’ll be the first to admit that I’ve made mistakes along the way!
The one thing I can say with certainly that I’ve done well in my seven years at 3Q Digital is surrounding myself with super-smart and talented people. This certainly applies to our incredible team, who has collectively kept 3Q at the cutting edge of online marketing. Silicon Valley is a small valley, so if my team hadn’t worked harder and driven better results than other agencies, I would not be writing this post today. So thank you to everyone at 3Q – past and present – who has made this possible.
I’ve also been fortunate to partner with some of the best venture capital firms around, who have trusted 3Q Digital to grow their portfolio companies – thank you for allowing us to work with you side-by-side to build some of the biggest success stories in the world. And lastly, to all the clients that have given 3Q the opportunity to work with you on your online marketing : there is nothing more fulfilling to me than to contribute in some small way to the success of your businesses.
To put it another way, I have a lot of people to thank – many of you reading this will get an invite to join me for a beer in the near future. Thanks for reading and thank you for your past and future support of 3Q Digital!