Schbang strengthens international footprint with acquisition of Addikt, eyes European expansion

Schbang, an independent Indian agency, has taken a significant step toward bolstering its international presence by acquiring Amsterdam-based design agency Addikt. This marks Schbang's first global acquisition and follows its entry into the UK market a year ago with the establishment of a London office. The acquisition signals the agency’s long-term commitment to Europe and reflects its ambition to accelerate its growth through strategic partnerships.

In an exclusive interview with Campaign, Harshil Karia, founder and managing director of Schbang, explained the rationale behind the move: "It took us around 20 months to set up our operations in the UK and convince people that we are part of their market. This was one of our key lessons from our London business. Hence, we decided to acquire Addikt as it was an attractive commercial opportunity, which we could unlock at both ends." Karia highlighted that entering the European market without a local presence is a slow process, but acquiring Addikt, with its 20-year history in the Dutch market, offered an efficient entry point.

The new entity, AddiktSchbang, will leverage the strengths of both companies, combining Schbang's technology expertise with Addikt's design capabilities. Addikt, which has a track record of working in India, conceptualised the brand identities of PhonePe and Tata Motors, Maruti Suzuki and Jio for broadcasting the Indian Premier League. It also designed the identity for the Kyoorius Creative Awards. Through this acquisition, Schbang aims to expand its footprint in Europe while enhancing its service offerings in India by introducing Addikt’s design expertise to its existing clients.

AddiktSchbang will now serve more than 300 clients globally, with Schbang’s 150-plus retainer clients in India that are managed by its 1,200-strong workforce. The agency’s UK business, which is anchored by clients like British Petroleum, Amazon Prime Video, and B2B firm Comply, will also benefit from this partnership.

Jio and Viacom 18 Sports commissioned Addikt to create programme packaging and design for Match Centre Live, the online broadcast for Indian Premier League, covering pre, and post-match discussions and analytics around the games.

 

Addikt’s roster of global clients includes well-known brands such as AkzoNobel, Booking.com, YouTube, and Rabobank. The goal is to facilitate cross-pollination of services between the two markets, allowing Schbang to extend its creative and strategic services to European clients while bringing Addikt’s expertise into its Indian operations.

The financial terms of the acquisition involve a combination of call and put options, wherein Schbang acquired 50% of Addikt's shareholding. Under the call option, the Indian agency has the right to fully acquire the company within 10 years at a predetermined price, while Addikt’s founders retain the right to sell their remaining stake after five years.

The deal is part of Schbang’s broader strategy to invest in long-term growth without affecting its balance sheet. Karia emphasised that the acquisition was financed through accruals and savings, ensuring there is no immediate pressure on profit and loss.

“We are looking at this acquisition as a long-term investment,” Karia explained. “When we started our London business, we had to build it from the ground up, whereas Addikt already has a robust business with steady cash flow.” Hence, this acquisition gives the company the flexibility to focus on growth rather than just survival.

As part of its future plans, Schbang aims to increase Addikt's annual revenue run rate from €2 million (around INR 18 crore) to €4 million (around INR 36 crore) within two years. Currently, Addikt’s annual turnover stands at €1.2 million (around INR 11 crore). Schbang itself posted a revenue of INR 225 crore for the 2023-24 fiscal year, up from INR 175 crore in the previous year.

The acquisition comes at a time when the European digital advertising market is expanding rapidly. In 2023, the market grew by 11.1%, reaching €96.9 billion. Projections suggest that the programmatic advertising sector in the continent could grow to €143.03 billion by 2029, at a compound annual growth rate (CAGR) of 7.22%.

Schbang’s foray into Europe through Addikt positions the agency to capitalise on this growth while establishing itself as a significant player in the region's creative landscape. By combining their strengths, AddiktSchbang aims to provide integrated marketing solutions that are culturally relevant and strategically impactful.

The partnership will focus on blending Indian technology, Dutch design, and British storytelling to create human-centric experiences for clients across different markets. Karia highlighted the importance of this fusion: “During my first meeting with Addikt’s team, I told them that more than anything else, I want you to spray your magic pixie dust on Schbang’s team of 300-400 designers.”

Schbang recently moved into a 40,000-square-foot office in Mumbai, which can accommodate up to 900 employees.

The integration of the two companies will also benefit from Schbang’s strategic partnerships with global martech leaders such as Meta, Google, Salesforce, Adobe, and Zoho. These alliances, combined with Addikt’s design prowess and Schbang’s technology capabilities, are expected to offer clients a seamless and comprehensive service across all aspects of marketing, eliminating the need for multiple agencies.

In addition to expanding its operations in Europe, Schbang is also exploring opportunities in other geographies, particularly the Middle East and Africa. “We will take a call, and probably we'd like to be in both, with the bigger investment likelier to be in Africa,” Karia revealed. The agency is also strengthening its presence in India, recently moving into a 40,000-square-foot office in Mumbai, which can accommodate up to 900 employees. It also maintains offices in Delhi, Bangalore, Jaipur, and Ranchi.

Despite its ambitious global expansion plans, Karia insists that Schbang will not use pricing as a competitive lever. “We will operate at market prices and significantly increase our value investments for the given prices in those markets. We want better value and service for the price, and that does not hinge on price-cutting,” he stated.

Schbang, which has remained independent and has not taken on any outside investors, operates in an industry dominated by large holding companies. This has presented challenges, particularly in terms of competing for large contracts. Karia noted that pricing can be opaque, with clients often working through procurement teams that use benchmarks for pricing and quality. Schbang’s strategy is to focus on being a leader in quality (L1) to create some flexibility on price.

Looking ahead, Karia’s goal is to grow Schbang’s consolidated revenue to INR 700 crore within the next three years and expand its workforce to 2,500 people. As part of this effort, the agency plans to increase its engagement with the design community, with a 12-city “design-athon” planned for January 2025. The event is expected to attract 2,400 designers from across India, further solidifying Schbang’s commitment to nurturing creative talent.