NEW YORK: North 6th Agency has made a strategic investment in New York City-based interactive marketing agency Magnetik.
The deal would create a combined agency with “a run rate this year of $12 million when [Magnetik] is integrated,” said Matt Rizzetta, CEO of North 6th. N6A plans to move to full ownership of Magnetik once the integration is complete.
Rizzetta did not disclose financial details of the deal but said North 6th was “making an investment in Magnetik’s operations, committing to certain dollar value and loading them up with sales marketing resources.”
“Obviously a piece of it was equity and a revenue share that Doug [Steinberg, CEO of Magnetik] and the management team will benefit from,” he added.
There will be no staffing cuts as a result of the deal, and Magnetik will operate separately for about a year with Steinberg as its CEO, Rizzetta said, adding that the timing of Magnetik’s complete integration into his firm depends on the outcome of other deals.
“A lot comes down to other deals we do,” he said. “We are looking at other shops.”
For now, North 6th will add Magnetik’s services to its outcome relations offering, which includes earned media, amplification and key performance indicator alignment, the firm said in a statement.
N6A is planning to absorb Magnetik into its in-house application team, which Steinberg will likely lead, Rizzetta said.
The two firms worked together before their leadership started seriously discussing a deal, Rizzetta said. The agreement was signed in the second week of April.
“We began talking right around when the pandemic began,” Rizzetta said. “But in full candor, one of the first things we had to do then was to protect the house and then make sure we could execute this once we decided to do it.”
Rizzetta said he had been impressed with Magnetik’s work.
“They had done white label work for our clients when they needed digital support, paid media, web development and creative,” he said. “They always did a great job.”
Rizzetta added that the deal made sense because both agencies are “strong, healthy businesses,” and he has seen more clients looking to one shop for both earned and paid media.
“We are seeing higher demand for consolidation than ever before among clients in this environment,” Rizzetta said via email. “Many clients are looking to optimize their P&Ls and integrate their marketing function under one provider as much as possible. This partnership with Magnetik enables us to expand our service offering and work with customers in this environment to optimize their P&Ls so that they get the best cost-value relationship possible.”