Boston-based digital and web agency Connelly Partners has had to be patient since entering the Irish market with the acquisition of Keith Lee's Strategem in April 2018. Led by Steve Connelly (61), the full-service digital agency has grown beyond its New England roots to operations in Vancouver and Dublin.
Since arriving in the Irish capital, Connnelly Partners Integrated Europe Ltd had racked up accumulated losses of €1.5m at the end of 2020. Some of that may be due to the accounting cost involved in the Strategem takeover, though the €1.5m owed to the American parent is real enough.
Connelly Partners envisaged scores of new jobs at the time of the Strategem deal, but headcount was 15 in December 2020. The strain of the pandemic is evident in the 2020 accounts filing, with end-year payroll tax liabilities surging to €480,000 from €160,000 a year earlier, possibly due to tax warehousing.
However, Steve Connelly is evidently in Dublin for the long haul. In February 2022, he finalised the acquisition of Zoo Digital, a larger business than Strategem, with a net worth of €840,000 in June 2021. When the deal was announced, Steve Connelly commented: "It is not in our DNA to ever be satisfied with who we are and what we do. We are in constant pursuit of better, always looking for ways to best serve our clients."
Zoo Digital was founded in 2008 in Dublin by managing director Colin Hetherington, Chris Preston (creative director), and Martin Byrne (technical director). The business has done well and provided a decent lifestyle for its three principals.
Hetherington (44) had a 40% stake, while Preston (44) and Byrne (53) each owned 30% of the venture. The three principals shared €300,000 in pay and €26,000 in pension payments in 2022/21, though that is not outsized in a company with 19 other people on the payroll.
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To earn more substantial rewards for their endeavours, a few years ago the three founders concluded that Zoo Digital had to scale up. The question was how? In Hetherington's telling, the company principals kissed many frogs before deciding to bank a capital gain from Connelly, while staying on board for the ride.
Colin Hetherington has been involved with websites and various forms of digital marketing since the dot com boom days at the turn of the century. He started out in San Francisco and then returned to Ireland for a master's at Smurfit Business School. He did a spell with Pigsback before moving to ad agency TBWA, owned by Omnicom, which also owned Agency.com, where Hetherington had a connection from his US stint.
Together with TBWA colleagues Chris Preston and Martin Byrne, Hetherington looked after TBWA's nascent digital activity. "It was small team but we were winning accounts that we really shouldn't have been winning, such as the National Lottery," Hetherington recalls.
"We approached website development pitches and projects with a consumer focus, like you would from a marketing or an advertising campaign. At the same time, we were applying the technical side of things to the marketing projects. That wasn't being done at that time, and that's what got us in the door."
Around the end of 2007, the trio decided they should "bust our balls" for themselves rather than somebody else. The founders weren't weighed down by mortgages and costly children, though start-up resources were meagre one of the first Mac purchases was a display model in the O2 store on Grafton Street.
The timing for a new advertising venture in May 2008 wasn't great, with Ireland's economy about to tumble into a deep recession. However, Hetherington relates that the Zoo founders weren't unduly bothered.
"This may sound like a cliché but the recession was a good time for a start-up like ours. We didn't have a large cost base, and if it didn't work out, we could blame it on the economic downturn. In fact, the recession played to our advantage. Nobody was hiring, so we could white label ourselves in the background to established agencies."
A partnership with ad agency McCann Erickson kept the wolf from the door, while Zoo Digital slowly built up its own client base. By around 2013, Zoo was standing on its own feet again, with a team of around a dozen people. Annual staff growth since then has been measured, says Hetherington. "We hire when we get to a level where there's a definite, as opposed to building capacity within the company and then finding the business."
Zoo Digital is a port of call for companies, organisations and brands that require a top-end website. Hetherington says there was a step-change in the company's inhouse web design expertise in 2015, with increased focus on user experience. Hetherington believes inhouse tech capability is a competitive advantage, as knowledge can be reused and client requests can be responded to quickly.
"The overall goal of what we like to achieve is end-to-end digital. When we look after a website, we have data on how users are behaving. And if we handle the advertising too, we understand how we're driving traffic to the site."
Zoo Digital clients span Electric Ireland, ESB, Glanbia, Hansard Global, New Ireland, KBC Bank, the Abbey Theatre and Burger King. Trade debtors in June 2021 were €545,000, suggesting turnover of €4m plus.
A couple of years ago, the three founders started giving serious consideration about the growth path. The soul-searching wasn't just about generating more income. The market for personnel with digital skills is competitive, and the Zoo founders were conscious of having to offer staff more opportunities. "Growth creates excitement and helps the team to develop. We could have continued on with what we're doing, but there are ambitious people in the company," says Hetherington
The growth options explored were funding from a bank to ramp up operations, partnering with another firm, or effecting an acquisition. The Zoo trio shied away from the debt option and pursued informal talks with numerous local and international peers.
This speed dating proved to be fruitless, not least because the Zoo principals were reluctant to surrender their own way of doing things just to become a small cog in a big wheel. Then Hetherington ran into Steve Connelly.
According to Hetherington. "They were doing things that we weren't doing, and vice versa. All of a sudden this one plus one equals three equation came to mind. We had the strong UX and UI, the digital thinking and creativity, and they had content creation and production facilities, and access to a broader set of tools and research methodologies. It started to stack up and make sense to us."
Tying down that fuzzy feeling into a share purchase agreement took around 12 months. Steve Connelly believes that the Zoo expertise will help his firm win more website projects in the US, and since the takeover the Zoo team has already been involved in a successful pitch.
"Having our team work on those bigger scale projects is very exciting," says Hetherington. "The other benefit is having exposure to more people and seeing how they think and how they approach projects, That's very important as well."
The US activities of Connolly Partners employ 120 people, and now in Dublin there are 25 people in Zoo Digital and 17 in what used to be Strategem.
