What you need to know:

• Enero backing B2B tech markets to drive growth.
• CEO Brent Scrimshaw thinks digital infrastructure players – AWS, Cisco, Oracle, Salesforce – will be unaffected by tech downturn.
• Nearly $60m in recent B2B acquisitions signal ASX-listed holdco’s bets on where best growth and margin lies.
• But traditional businesses powering – BMF posts best result in 25-year history – and ex-Nike exec sees Australian operations weathering any incoming headwinds.
• Scrimshaw doesn't rule out further buys, but suggests traditional and neo holdco approach of "M&A as a proxy for growth" is legacy model to avoid.

Pitch roll

Enero is betting on business-to-business markets to fuel its growth engine and CEO Brent Scrimshaw claims the big bets it’s placing will act as global accumulators.

After posting bumper revenue (up 20 per cent) and earnings (up 40 per cent), CEO Brent Scrimshaw told Mi3 that the headwinds biting technology companies show little sign of blowing its momentum off course, because the big cloud players now on its books – AWS, Google Cloud, Salesforce, Oracle, Fujitsu – are still powering.

“We’ve doubled down on B2B technology through the investments we’ve just made. That signals a significant opportunity for us,” said Scrimshaw of the A$47.9m in cash and shares paid for B2B sales and marketing agency, ROI DNA and the $4.7m acquisition of Singapore-based B2B tech marketing agency, GetIt.

Alongside last year’s £3.5m (A$6m) deal for McDonald Butler Associates, a UK-based B2B sales and marketing unit, the plan for the year ahead is to bed-in the new businesses – and start making more money from them. Scrimshaw said the buys are already moving Enero up the food chain.

“In essence, what we've built in the last twelve months is a global B2B tech marketing practice,” said Scrimshaw. “We think that enables us to play both to much larger scale RFPs as well as serving needs for clients globally, which we were unable to do before.”

In the weeks since acquiring ROI DNA, Enero has had “two large-scale global RFPs come into the business in the United States that we're now responding to that prior to the acquisitions we wouldn't have been able to”.

He indicated adding B2B digital, martech and performance marketing capability, which he terms "revenue services", will also serve as a ballast against potentially choppier global waters.

“As business and marketing budgets come under pressure, the introduction of revenue services ... through the acquisitions ... will become even more meaningful," said Scrimshaw. "Any marketer or chief growth officer is now looking for more measurable results – and they're looking for results that can be directly attributable to revenue generation. That's the intent behind the recent acquisitions.”

More buys?

While focusing for the next 12 months on “maximising the integration" of the acquired businesses in order to “cross-sell and upsell” services across the group, the former Nike exec did not rule out further acquisitions, particularly in the US, which now drives the lion’s share of group revenue, “and to some degree Australia and potentially the UK and Europe”.

Asked whether Enero could sustain its momentum, given the problems of its Photon past, and the growing pains of other ‘neo holdcos’ such as Sir Martin Sorrell’s S4, as well as traditional advertising holding companies, Scrimshaw said Enero under his watch takes a different approach: “We do not run a holding company model whereby M&A is a proxy for revenue and earnings growth.”

Scrimshaw said any future acquisitions targets would need to fit into Enero’s three core verticals of technology, healthcare and “challenger consumer", and complement the brands served by those businesses. Whereas he suggested “more traditional holdcos have been … more focused on trying to drive connectivity and trying to unlock layers of cost over the last few years".

Headwind break

While start-ups and tech firms continue to suffer the effects of investor flight – with significant implications for the advertising and media supply chain – Scrimshaw thinks Enero is largely insulated.

“If we were sitting here six months ago or twelve months ago, to be deeply embedded in the world of technology would be seen as a huge positive. Depending on your perspective these days, technology can be viewed very differently, particularly if it's at the early stage start-up, investment-based businesses and valuations of those businesses, or the ability to raise capital for those businesses,” said Scrimshaw.

“Number one, we don’t work with very many of those businesses. Secondly, the bulk of our business in technology is within B2B tech – brands like Cisco, Adobe and Oracle that are invested in technology infrastructure. If you look into the investment those businesses are making in infrastructure, security and cloud, it continues to grow at a rapid pace,” he added.

“Where the potential negativity lies with the tech narrative today is more around businesses that tend to derive their revenue from advertising-based models. As you would expect over time with a reduction in consumer sentiment, chances are you may see some reduction in advertising or marketing budgets in businesses that rely more on consumer adoption or engagement versus businesses that are invested in infrastructure.”

Hence Scrimshaw’s bullish B2B tech outlook, with “no [pullback], not at all” from clients within that sector.

While there are “some pockets” of the business that are seeing “slightly slower decision-making,” he suggested that is due to summer in the northern hemisphere, “where people are trying to actually have a break this year” after two years disrupted by Covid.

“I think the complexity of decision-making, the involvement of procurement in an uncertain world, means that some decisions are being slightly delayed. But we've not seen that result in revenue loss," he said, "at this point in time.”

Local heroes

North of 60 per cent of Enero’s earnings now come via North America, with US business growing 42 per cent last year. He cited programmatic platform OB Media, which uses "cookieless" technology to deliver "high intent traffic" via Bing and Google search for "localised advertisers that are looking for a greater return on their advertising investment" as a key growth driver – which may ultimately roll out in markets including Australia.

Either way, Australia, with revenue up 5.7 per cent and margin holding up, remains positive. Scrimshaw indicated BMF's performance was key to the local result.

“In the 25 years BMF has been operating, they have just posted their most successful year ever with double digit top and bottom line growth,” said Scrimshaw, with the agency making hay from increased Government work over Covid.

He said digital unit Orchard’s business is “rooted in healthcare”, which remains a long-term growth market, while there is “continued investment” within its consumer business working with brands such as Hyundai, “certainly within the first few weeks of the new financial year”.

As such, Scrimshaw suggested local market fears of a looming new year crunch may not be universally applicable.  

“There is continued optimism about investment in the categories [in which we play] in Australia … we feel quite confident as we look towards FY23.”

Centralised content?

While demand for digital content production continues to run hot locally and globally, Scrimshaw indicated that a centralised production hub is not on Enero's immediate roadmap. But he hinted that the deal for GetIt may lay the cornerstone, citing the firm's "world class content creation team" in Bangalore, India, which the group now plans to harness.

"We do not have a centralised content creation hub at this stage," said Scrimshaw. "But we will evaluate the most effective and impactful way to create and deliver content at scale."