How a Delco film studio sold $10 million in training videos after COVID hit

In Delaware County, on an industrial park hillside between the busy Concord-to-Chester highway and a tulip-poplar wood, sits the Marcom Group, a digital-video studio. Inside the two-story office, a staff of 20, joined by Philadelphia-area actors working side gigs, make safety videos for baking and bottling companies, furniture factories and drug developers, tech giants, and city halls.

It gets busy. Actor Tricia Sullivan, of Newark, Del., keeps getting promoted: She says she’s been “a warehouse worker, a warehouse manager ... a nurse, and recently a doctor” — in Marcom productions since 2015.

And it’s been extra busy lately, thanks to the remote work movement that sped up during the coronavirus shutdowns, says Marcom cofounder Don Leonard, who started the company with Ann Diersing 35 years ago. The name of their business is short for marketing and communications.

“COVID accelerated the trend to online learning,” Leonard says. The company sold over $10 million worth of training films last year, up from $8.6 million the year before. Leonard says they’re on track to sell $13 million this year.

Marcom’s catalog includes long, short, and specialized programs training in topics such as construction, electrical work, heat, hand, and fire safety — as well as instruction on escaping an active workplace shooter, avoiding COVID-19, back injuries, distracted driving, and bullying, among other topics.

Training can be mandated by industry policies, local rules, and federal requirements under legislation such as the federal Occupational Safety and Health Act. Marcom’s OSHA unit tells workers how to report problems and file complaints about dangerous conditions.

“They’re the best out there,” says Derek Dunaway, who was chief executive of TPC Training, which sold videos from Marcom and its rivals to corporate users until its sale last winter to American Safety Council, where he’s now a director.

“Their videos are interesting and dynamic,” Dunaway added. “They have been surprisingly innovative, customizing what we call micro-learning, so what they present is efficient for the learner, and for the company. They’ve made the technology investment in a unique niche that may not be big enough for the big media companies to get involved, but is growing at an exciting pace.”

Marcom claims scores of corporate clients, among them drug distributor AmerisourceBergen and cafeteria giant Aramark, tech leaders Apple and Cisco, Packaging Corp. of America, and Crowley Marine.

Leonard says his firm is the last independent operator, so far as he knows, in its cottage industry, after a spate of deals in the past five years led to more consolidation.

And Marcom has been courted: “This one investment group made us a $100 million offer” to purchase Marcom last winter, said Leonard. A representative of the would-be acquirer declined to comment.

That offer price works out to about 10 times past year revenues, which would have been above average for private companies its size, but within the range for fast-growing, tech-based firms, according to GF Data, a King of Prussia firm which tracks private company sales.

Leonard said he turned the offer down because he figures Marcom sales should double, sending its value up as high as $250 million, if the business keeps growing this fast, over the next three to five years.

A onetime Deloitte accountant who longed to be a “corporate golden boy,” Leonard spent the early and mid-1980s building data systems for Penn Mutual, starting European subsidiaries for collectibles-marketing giant Franklin Mint, and scouting locations for drug factories in Germany, before helping make his first OSHA safety rules training tapes for a Delaware utility — and got the media bug, corporate edition.

“I wanted to create,” Leonard recalls. And the accounting consultant in him wanted to create “something with recurring revenues” — paid updates that would reward the work for years to come. The tapes were a hit, orders began to flow, he partnered with Diersing, who heads the administrative side of the business, and made safety videos his life’s main labor.

There were many companies selling training videotapes in the 1980s. To stay competitive, Marcom has had to cope with big technology platform shifts, on average, every decade:

This “adaptive learning” cuts the amount of classroom time workers have to be paid for, since they don’t need to watch as much one-size-fits-all material that doesn’t affect their own job. Marcom’s main catalog now includes 200 on-demand digital videos, averaging around 25 minutes each, but easily mixed and matched depending on the chemicals or processes a client uses, and reduced to the most relevant chunks for each user.

Leonard wants to go global. Spanish-language sales have risen as Mexico’s pharmaceuticals industry has expanded. But a first partnership in China foundered: The partner translated dozens of Marcom videos into Mandarin, but had few buyers.

Marcom used to have a larger outside marketing force, which sold training media at safety industry conferences and other events. But he’s found it’s easier to sign up with safety equipment distributors, whose salespeople pitch hard hats, safety glasses, and fire extinguishers; they add Marcom to their product list, for a fee.

That has freed Leonard’s staff to focus on production. “We do everything in-house,” he said, walking visitors through a mock doctor’s office, a drug packaging lab, and a video “green screen” room where the background, or key text and data, can be added later — all at the two-story headquarters.

What makes a successful corporate video? “It’s got to be entertaining,” and produced with the quality people are used to from pay TV, says Leonard. But maybe not too entertaining: “‘Funny’ doesn’t work in the safety market,” he adds. “There was a California company that tried it, and after a few sales they were not successful.” It’s hard to be funny, and it’s harder if you’re reminding people about OSHA regulations on hazardous chemicals, or electrical safety.

Sullivan, the actor from Newark, had taken acting classes at the University of Delaware and acted in community theater. But working in Marcom productions “really gave me the confidence” to win more commercial jobs, she says. She’s had gigs at home-shopping giant QVC in West Chester and recently was in a Giant Foods ad with her kids.