Investment company Infratil Limited has sold its 100 percent stake in iSite Media to QMS for $49 million.
Infratil chief executive Marko Bogoievski said in a statement that the deal was set to be finalised on 10 December.
"This strategic acquisition is consistent with the QMS strategy to leverage its existing appetite for growth in attractive markets," QMS NZ chief executive Chris Monaghan.
"The integrated QMS NZ and Isite businesses will benefit greatly from the proven OOH digital experience the wider QMS team delivers and plans are in place for an accelerated digital roll out across key NZ markets. Isite is a very well run business full of experienced industry professionals, as a combined business the industry can be assured best in class development and service levels will continue and prosper under QMS ownership."
Infratil has had iSite on its books since 2011, when it purchased the company from Wellington Airport.
Infratil’s latest annual figures show that iSite delivered $5.2 million in earnings in the previous financial year (up from $4.7 million the previous year).
iSite currently represents over 34 percent of the total New Zealand outdoor advertising market and the company had a book value of $18 million as recently as 30 September 2015.
The ongoing consolidation of the OOH market since 2008 has seen the industry come to be dominated by APN Outdoor, Adshel and now QMS, which account for around 90 percent of the OOG media spend as measured by OMANZ.
The decision by QMS to invest in the outdoor company follows on from the recent news that QMS established a nine-year deal with Auckland Transport in terms of its outdoor advertising properties, including the transit media contracts, which are set to transfer to QMS by October next year (this deal was signed with Ambient Group, which is a subsidiary of QMS).
“There’s an obvious nexus between where iSite is in performance and QMS’s ambitions in New Zealand, particularly with their securing of the transit rights with Auckland transport,” says iSite chief executive Wayne Chapman. “I guess iSite’s proven expertise and track record in that area was attractive to them, as well as the overall performance of the business.”
Chapman, who has been at the helm of iSite since 2007, says that Infratil conducted a review of iSite’s business prior to making the decision to sell.
“Infratil periodically reviews the assets in its portfolio, and iSite has been the subject of a strategic review over the last few months. As a result of that review, Infratil decided to pursue some of the interest in the business, and that resulted in today’s announcement … For investors, there are times to invest and times to sell. And they decided it was a good time to sell.”
Adding iSite into the QMS eco-system could potentially result in the need for some restructuring in the future, but Chapman says that it’s business as usual for now (StopPress is also pleased to report that there are no plans to change iSite employee Rupert Fenton’s title from head of freshness).
“I think the timing of this transaction, just prior to the summer break, means that it’s probably not immediately necessary to tackle all those questions. I think everybody can finish off the year in their respective businesses, and then in the new year, some thought can be turned to how to best realise the opportunity that exists with putting the two businesses together.”
Chapman says he is still fully committed to the future company and says that he looks forward to working with the QMS team.
One of the major reasons why iSite is such an attractive proposition to QMS is because the company has a strong track record in the local market. Over the last few years, the company has won various marketing awards for its data-led initiatives, which have provided a means by which to measure the reach of outdoor campaigns.
In 2013, iSite launched ‘Highly Targeted,’ a programme that mapped over 22,000 bus routes and cross-referenced these with census information, giving advertisers the ability to target specific segments of the market through bus advertising.
After the success of this programme, iSite invested further in research and data by launching the ‘Reach and Frequency’ programme, which added debit and credit card information into the mix (this approach was later also applied billboard advertising).
“It’s all wrapped up in a central philosophy of changing the conversation from selling inventory to creating links with audiences,” says Chapman.
“Our mantra, aspirations and ambitions have always been around retaining thought leadership in the market. Market leadership can come and go, and it depends on a whole raft of measures, but we’ve always been about holding iSite up as the thought leader in the market and that’s what we’ll continue doing.”
In addition to focusing on research and insights, iSite has also invested millions in its digital expansion, recently announcing that it was set to more than doubling its existing collection of large format digital screens under its Aura brand with five new sites and that it was also planning to expand into Christchurch. And this is likely to continue given QMS's ongoing expansion plans.
Chapman is also quick to point out that iSite isn’t going to drop its guard now that the big Aussie company has taken over.
“We believe we’re a challenger brand in mindset and that’s not going to change. That culture is engrained.”
Until now, iSite’s business has been restricted to the local market, but Chapman believes this could change given QMS’s strong position in the Australian market.
“We haven’t had the same access to the Australian market as our other Trans-Tasman competitors have had, so we’re excited about that potential as well.”
Given the success of iSite’s various programmes in New Zealand, it wouldn’t be far-fetched to see QMS employ similar strategies across the ditch.