Q&A with Asia Pacific Digital chairman Roger Sharp

Roger SharpRoger Sharp is chairman of Asia Pacific Digital, a Singapore-headquartered digital services network of 360 people that listed on the Australian stock exchange last year. Earlier this month, it bought Singapore digital agency @ccomplice.

In this Q&A with Mumbrella, the former lawyer from New Zealand talks about the origins and ambitions of a company that claims to be the biggest independent digital network of its kind in Asia.

First, tell about the origins of Asia Pacific Digital.

Asia Pacific DigitalWe started as an investment firm that grows companies and sells them to a natural buyer. We don’t invest in startups. We typically look at companies that need a bit of extra grunt to move them forward.

The last one we built and sold was travel.com.au. We also owned lastminute.com in Australia. We bought it out, operated it, then sold the whole lot to Wotif. It was a very successful five-year journey from which we took learnings into other deals.

During the financial crisis, it was hard to work out what to do next. Pretty much the only things to invest in at the time were guns and blankets. We learned from owning lastminute.com.au that the migration from above to below the line would continue for years, but we felt that the digital value chain had become fragmented.

We were talking to marketing managers who were saying that it was hard to justify their spend because they couldn’t work out what to put where, and analytics weren’t working for them. We thought that the digital value chain was fundamentally broken.

We wanted to quietly build a group of companies that solved that conundrum, from e-commerce to digital marketing. There’re a million agencies that do something – driving traffic, converting, strategy, technology or creative. But very few groups can do it all, and in an integrated way [APD’s companies include digital agency Next Digital, customer acquisition firms Empowered Communications and dgm and customer management firm Jericho and digital agency @ccomplice].

You have a geographical spread that includes Malaysia, the Philippines, Singapore, China, Hong Kong, Australia and New Zealand. You say you want to move into Indonesia and Thailand next. Isn’t India part of the plan?

My last foray at running regional services business was running an investment bank from Mumbai to New Zealand [Sharp is the former global head of technology at ABN-AMRO]. The geography is just too big. It was ok when I was working for the world’s eighth largest bank, but for a smaller company we have to manage our resources well. Once we’re growing and established in the markets we move into, we’ll worry about India and the rest of Asia.

Where do you want APD to be in 12 months’ time?

We have set out six key objectives for the company. Build a network with the product strength we need in Asia. Move international revenue from Asia from 18 to 50 per cent of the business. Have 50 per cent of our staff in Asia. Grow organically in Asia by 30 per cent over the long term (we are currently growing by 64 per cent in Asia). Break even EBITDA while expanding and have a long term EBITDA margin of 10 per cent.

APD’s first half of the year financial results for the year ending December 2014, published on the Australian Stock Exchange on 16 February:

APD earnings
One swallow doesn’t make a summer, but we’re going well. We’re living within our means. A lot of tech companies will spend like mad to get growth. We’re using the money we make to grow. If there was another financial crisis tomorrow, we wouldn’t run out of money – we’d simply dial back our spending.

What else makes you different as a digital services provider?

Supps R UsWith some clients, we’re so confident in their businesses that we work with them on a risk and reward basis. Most agencies will charge clients x amount to do their e-commerce. But if we like a company, we’d do it for zero upfront and for revenue share and equity stake – this is something agencies hardly ever do. We’ve done this with Supps R Us, an Australian sports nutritional supplement [which recently hired Arnold Schwarzenegger as its brand ambassador]. Over the next five years, we’ll provide AU$4.5 million in digital services as the company moves into Asia, in return for a fixed retainer, a share of revenues and an equity stake of 30 per cent. Supps has grown by 100 per cent each year for the last two years. We think we can make it grow faster.

Under what circumstances would you sell the business?

We’ve got some growing to do first. We want to be in Thailand and Indonesia first. And we want profits to be higher, with revenues of around AU$80-100 million, then we’ll think about it. We want a natural partner that works for our people.  If it doesn’t happen, we’ll be fine as we are. We are enjoying the journey.


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