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Earlier this month, Japanese ad major, ADK, announced the acquisition of Chennai-based Rage Communications, an independent agency that specialises in digital experience design and e-commerce solutions. ADK will own 50.1 per cent of the company. Rage is 26 years old, incorporated on March 15, 1996, and founded by JRK Rao, an IIT Delhi and IIM Calcutta alumnus, and Karthik Kumar, formerly of IMRB and co-founder of MARG. In FY 21, Rage had revenues of ₹35.22 crore and in FY 22, the forecast is for revenues of ₹41.90 crore.
“ADK and Rage share a common belief in the future of digital, and its critical role in driving the customer engagement and marketing communication needs of businesses,” says Rao of the ADK acquisition, while Karthik Kumar says, “Rage’s proven ability to keep pace with evolving technologies and ADK’s heritage, allow ADK-Rage to bring to bear the combination to create and execute well-crafted marketing solutions that use the digital eco-system effectively for its clients.” In this interview, both explain why they decided to sell the company they had carefully nurtured over the years, and that was perhaps among the early digital natives.
Why did you choose to sell to a Japanese company now?
The reason we were looking for a partner is because as founders, we were not getting any younger and since we are a professional company employing professionals, it was appropriate to ensure a partner who would continue the culture of professionalism, when we step down from the active management of the company.
What influenced your decision to go with ADK and not with one of the large MNC agencies present in India, mostly Western, of course.
We had been in talks with other US-based networks. Ultimately they did not fructify for various reasons ranging from structural issues to a mismatch in business priorities. With ADK we found a partner where there was a synergistic fit in terms of: Low geographical overlap of markets; complementary client mix, with no conflicts of interest; services mix that is mutually supportive — both, for our organisations and for our clients. This gives us the opportunity to deepen engagements with existing clients, and appeal to a wider cross-section of clients.
What does ADK bring to the table, and what does Rage bring to the table for ADK? How will the acquisition help Rage expand its footprint / its work?
ADK is the third largest agency network in Japan. It brings with it a rich history of traditional marketing communication skills, increasing focus on digital services, long-standing client relationships, and presence in most of the key markets in Asia, Europe and USA. Whereas, Rage, with its digital marketing communication focus, complements ADK’s traditional strengths to offer its clients a well-rounded communication strategy that encompasses traditional and digital media seamlessly. Additionally, Rage’s presence in India and Australia, allows ADK to expand its geographical coverage and, simultaneously, aids Rage in extending its services to ADK’s global clients with a presence in India and Australia.
What percentage of stake has ADK acquired and what is the stake the founders have retained?
50.1 per cent. The founders and other principal investors of Rage continue to own 49.9 per cent of the company.
What is the work that Rage is doing for its top clients – and who are they?
Rage is a ‘digital only’ company. Rage’s expertise is in bringing to bear all the different disciplines that make up digital marketing communications – strategy, ideation, technology, optimisation – under one roof and offering them seamlessly to clients. Being a full-service digital communications company, our services extend from creating consumer-centric digital web presences (for example, web sites, eCommerce platforms, mobile apps) to digital marketing that includes varied types of advertising solutions (organic search, paid search, performance and programmatic marketing, etc.), platforms (social media, CRM platforms, bespoke platforms), technologies and technology stacks.
Our current client portfolio includes Akshaya Homes, AMP, Citibank, Jones Lange LaSalle, MasterCard, PharmaScience, Sterling Holidays, Sephora, Williams Lea Tag, Tata Motors, Tata Croma, YRG Health Care, Unilever Food Solutions, Unifi Capital, IIT Madras and WestPac Bank. For several of these clients we provide cross-border services comprising markets in Asia, Europe and North America.
What is the acquisition cost to ADK of Rage?
Alas, contractual obligations prevent us from answering this question. Needless to add, the commercial terms are in line with current practices in the industry.
What have been the chief inflexion points in Rage’s growth over the years?
In a broad sense it has been the rapid changes in the digital eco system that have driven growth, as clients begin to appreciate how our services enable them to harness digital technology to meet their business objectives.
So what does the future hold for Rage and its client base? When does the integration happen, and have all your clients been informed of this?
All clients were informed in advance of all public announcements. The integration is underway and it is early days still. We expect that the two organisations will be fully integrated in 9 – 12 months, and be able to work as one team across borders and as one ADK-Rage team.
What is Rage’s employee count now and are all being absorbed by ADK in the acquisition?
Our current headcount is around 200 and all will continue to be part of the ADK-Rage team. Staffing is slated to increase as we reap the benefits that have been listed earlier.
So, how long will the founders remain in the company before you exit as you will both be minority shareholders as per the agreement?
Both the founders continue to be on the board of the company and continue to have executive responsibilities over the deliverables of the company and its key metrics.
How and why did you name the company Rage when you did; was it in an angry moment or you wanted it to be the rage!
Quite simply, the name Rage comprised easily pronounceable syllables from the names of the first two investors in the company. The happy coincidence of this was that the founders equated the term Rage to common usage as in, ‘all the rage’ or the ‘rage of the town’, rather than anger. Hence our website url is WhataRage.com.
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