10 years of ad pepper and ad agents: a success story

Dr Jens Körner, CEO of the ad pepper media group, explains how the acquisition of ad agents by the ad pepper media group in 2007 laid the foundations for the emergence of one of the most successful performance agencies in the digital advertising market.

ad pepper media group – what does it actually do?
ad pepper media International N.V. is a pioneer in online marketing. Established as a Dutch N.V. in 1999 (equivalent to the legal form of a British limited company), with its head office in Nuremberg, the company was able to make the leap onto the trading floor in Frankfurt as early as 2000. ad pepper media was and remains a trailblazer in the digital advertising market, and one of the most experienced players in the sector.

Used for the first time worldwide in 1994, the (static) internet ad banner was initially one of the principal revenue drivers for ad pepper media. These were the early years of online marketing, which developed at a great pace and was shaped from the start by rapid technological change and innovation. With the proceeds of the IPO to support them, in this early phase of the company ad pepper media strove to be a trailblazer in technological development – partly through acquisitions, but also by setting up their own (costly) development centres in Denmark and London.

Today, as an investment holding company, ad pepper media International combines three operational areas: Webgains (affiliate marketing), ad pepper media (lead generation) and ad agents (performance marketing agency). As it operates today, the business has little to do with banner ads any more. These days online marketing is generally ‘performance marketing’, which means most clients are interested in increasing their particular Key Performance Indicators (KPI) by means of measurable and above all scalable campaigns via all end devices. It is in just this field that the three above-mentioned companies operate, though with various focuses. One of the most successful companies in the ad pepper media group is ad agents, which ranks among the largest and leading performance agencies in Germany. These days, ad pepper media no longer embarks on costly, tech-focussed adventures. The technological expertise, however, remains. Because even though not every investment paid off, ad pepper media is virtually unique among market players in not only having passed through every development phase of online marketing, but also having actively shaped it. The group is profitable and generated revenues of over EUR 60 million in the last year.

10 years of ad agents – a success story
When ad pepper media acquired a majority stake in ad agents in 2007, the company was not yet even a year old. With its focus on the booming market for search results, the young, ambitious company run by its two founders and managing directors Wolfgang Schilling and Dirk Lajosbanyai was in a perfect position. The number of clients being offered search engine services such as SEO and SEA in particular grew rapidly – and the number of employees rose accordingly. Early on the company made a name for itself as a quality provider that prioritised transparency, proactive communication and first-class service. At the same time, the huge increase in clients and employees presented a major challenge, not least in terms of financing the company’s working capital. The two managing directors, who are still on board today and largely steer the development of ad agents GmbH, therefore decided to manage future growth together with an experienced and financially strong partner – ad pepper media International N.V.

Before the acquisition, ad agents had 5 employees (including the two managing directors) and approximately EUR 1.6 million in revenue. Its success was largely dependent on individual major customers, as is quite common in the early phase of companies around this size. Therefore, from the start of the collaboration, the emphasis laid on recruiting well-suited employees, building up the product portfolio and managing the company’s rapid growth. The fact that the ad pepper media group had by this time been publicly listed for seven years, and was used to setting up budget planning processes and submitting quarterly reports promptly in line with international accounting standards, was a help to ad agents with regard to professionalising their reporting, accounting and compliance structures. Due to the company’s focus, Google was naturally the most important business partner, and was very well-disposed towards the optimised processes of ad agents. New clients quickly came on board and, due to targeted diversification and a high-quality range of products and services, even setbacks through the loss of individual major clients could be successfully overcome.

The financial security of the ‘parent company’ ad pepper media group provided additional confidence, as it was never in debt with banks and offered a liquidity buffer – primarily based on the IPO and successfully managed M&A. This was a great ‘asset’ in every sense, and a sign of security that should not be underestimated – not only for clients but also for the ad agents workforce. Furthermore, the ad pepper media group pursued an ‘at arm’s length’ strategy right from the start, i.e. there was no attempt from the holding company to exert pressure on the managing directors or to force synergies with the other two areas of the group. On the contrary, ad agents continues to this day to be largely self-sufficient in its operations, making independent, assertive decisions about new technologies, products and clients. This is in keeping with the advice of US economist Peter Drucker: ‘Nothing is less productive than to make more efficient what should not be done at all.’

From the beginning, all of this set ad agents on a path of healthy growth, and enabled it to grow faster than its competitors. Even if the early years in particular were difficult, it has nonetheless been possible to make a profit in every fiscal year since the company was founded.

Today, ad agents has more than 100 clients and, with a turnover of 12 million in 2016 and nearly 80 employees, it is one of the leading performance agencies in the German market. In addition, ad agents GmbH is a Premier Google Partner, holds numerous certifications from various networks and technologies, and serves notable, market-leading clients from a wide range of sectors such as retail, fashion, finance, pharma, electronics and FMCG. As a full-service digital agency, the spectrum of products and services extends far beyond SEO and SEA these days. Social media advertising, data-driven marketing and Amazon marketing are only the most recent additions. Advising customers on the development of their digital strategy is also becoming increasingly important.

Moreover, ad agents is one of the few remaining independent performance agencies in the German market that has not yet merged with or been acquired by a large international media agency. Without affiliation to or support from an international network, today it develops campaigns and concepts for clients such as Black+Decker, Coop, Sparda Bank, Euronics and Gerry Weber. And its success shows no sign of stopping: in the first half of 2017 the company reported a new sales record with a growth of 31.6%, making it not only the fastest growing company within the ad pepper media group, but also one of the strongest growing in the entire sector. For ad agents, it is also the best second-quarter result since the company was founded. And the next milestone is already within sight: soon to have 100 employees, ad agents is entering a new league.

About the author
Dr Jens Körner has been CEO of ad pepper media International N.V., the holding company of one of the most experienced international publicly listed company groups specialised in performance marketing, since March 2017. Furthermore, he has been the sole member of the group’s Management Board since March 2017, on which he has served since November 2006, initially as CFO. In this role he was responsible for the acquisition of ad agents GmbH in 2007 and has been one of the three managing directors of the company since 2012.