The way RDW Group Inc. President Mike Doyle sees it, last week’s acquisition
of Boston-based digital media firm iFactory was a two-for-one.
First, merging with the 30-employee firm gives Providence-based RDW an instant
presence in Boston, a market it long has viewed as a logical next step after
growing into the largest advertising agency in Rhode Island.
But the deal also bolsters RDW’s services in what Doyle sees as an increasingly
critical realm for communications agencies: interactive media.
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“This broadens our skill set in interactive, which I honestly believe is the
future of the advertising industry,” Doyle said. “I think someday we’ll use
our (computer) monitor as the principal means of doing everything. Now we have
a platform and the technological capability to put us at a competitive advantage
in the long term.”
iFactory specializes in Web site development, having launched more than 100
successful sites since 1996. Its services range from basic marketing pages to
solutions for intranets, e-commerce, search-engine optimization and animations.
The 12-year-old agency primarily serves the health care, higher education,
financial services, life sciences and nonprofit sectors, a portfolio that mirrors
RDW’s areas of specialization. Its client list boasts Harvard University, Rhode
Island School of Design, Merck & Co., Simon & Schuster, the Ford Foundation
and Museum of Science, Boston.
Under the deal, RDW will shift its 12-person interactive division to iFactory’s
office at 368 Congress St. in Boston starting as early as this week. Doyle said
there would be no layoffs and would not disclose terms of the deal.
The deal will add $20.68 million in annual capitalized billings on $3.1 million
in gross profit for RDW. New RDW totals for 2004 will be $108.28 million in
capitalized billings on total gross profit of $16.24 million.
Before settling on iFactory, RDW spent more than two years performing due
diligence on more than 30 Boston-area communications agencies in a quest to
gain a foothold in the Hub, Doyle said. iFactory is among the few remaining
interactive-media firms in Boston following a four-year industry shakeout, and
is profitable, he said.
“This is an important strategic move for us,” said Alen Yen, iFactory president
and creative director, in a news release. “Joining forces with RDW Group greatly
enhances our capabilities and provides us with a much stronger foundation from
which we can build and enhance our client offerings.”
Dennis Franczak, head of RDW’s interactive division, will lead account service
and business development in the Boston office, while Yen and Glenn Morgan, also
a principal at iFactory, will oversee creative services and management services,
respectively.
Eventually, RDW plans to grow the Boston office beyond interactive offerings
into a full-scale agency, including traditional advertising and public relations
services.
Doyle said RDW’s focus on small- and mid-sized accounts, including many independent
companies and nonprofits, often requires close collaboration with clients –
something that drove the need for a Boston presence.
“Boston, like Rhode Island, is incestuous when it comes to business. If you’re
not there, you don’t get called,” Doyle said. “And we can’t get any bigger in
Rhode Island than we already are.”
RDW has grown largely through acquisitions since its founding in 1986 by Doyle,
principal Tom Walsh, and now-retired Phil Rivers. Its most recent deal was the
November 2003 buyout of East Providence advertising firm Donnelly & Duncan.
RDW likely will look for more acquisition targets, possibly in Connecticut
or New Hampshire, Doyle said.
The iFactory acquisition gives privately held RDW 120 employees and about
$15.5 million in gross annual income, which makes it the largest independent
communications firm in New England, Doyle said. He said other large agencies
in Boston, such as Hill Holliday and Mullen Agency, are owned by large conglomerates.
RDW has amassed more than 80 accounts, mostly in Rhode Island and Massachusetts,
including GTECH Holdings Corp., Blue Cross & Blue Shield of Rhode Island,
the Massachusetts Medical Society and jewelry retailer Ross-Simons.
Mike Colias is a contributing writer to PBN.
