Philadelphia's online advertising business may lack the cachet of New York's Silicon Alley.
But the region has its own "digital chops": It's home to Conshohocken-based Internet marketing agency PointRoll Inc. (owned by newspaper publisher Gannett Co. Inc.), Center City-based online drug-marketing specialist Razorfish/Digitas, and other creative and specialty software firms with national clients, says Todd Miller, newly promoted boss at Archer Group, the Wilmington firm that builds online ads for JPMorgan Chase, Wawa, Herr's, American Water, and other big Philadelphia-area companies.
Archer has grown to nearly 60 professionals, 10 times its 2005 staff, as online advertising demand has risen. It has expanded to occupy three stories of a renovated brick building in Wilmington's reviving Lower Market Street (LoMa) district, near the newly reopened Queen Theater and the new World Cafe Live. And it has added a Center City Philadelphia satellite office.
Business has been busy enough that cofounders Lee Mikles and Patrick Callahan last week could afford to partly cash out, and step down from day-to-day management to spend more time with their kids, leaving Miller and Mike Derins as comanaging directors. The founders remain cochairmen.
In another boost for the local creative class, New York's Tremor Media, the online ad-buying technology firm that rivals YouTube as a viewer magnet (according to ComScore data), has hired Greg Ricciardi's 20nine agency, based in Conshohocken, to design and place ads announcing its "rebranding" as Tremor Video.
The new name is another sign the Internet is where Americans go for video.
Still in talks
Gov. Corbett's Department of General Services is negotiating a new agreement for the sale of the former state office building at Broad and Spring Garden Streets to Philadelphia developer Bart Blatstein's Tower Investments Inc
Blatstein agreed to buy the tower for $25 million way back in 2008 under Gov. Ed Rendell, but the deal lagged when the state faced delays moving its workers to offices owned by Rendell backer Ron Rubin's Pennsylvania Real Estate Investment Trust.
Then Blatstein lost financing for the project as development loans dried up. Both sides had to make financial concessions for the privilege of extending the agreement.
The department is now "in negotiations" for a new deal, also with Blatstein's company, and hopes for an agreement "in the next few weeks," spokesman Troy Thompson told me. Blatstein didn't call back. He's said in the past that he plans apartments in the tower, plus stores and restaurants along the south side of Spring Garden and the west side of Broad.
North Broad has been slowly redeveloped as a residential district in recent years, a move that's continued despite the recession, as demand for apartments replaces condominium sales.
Business-sale financing won't grow a lot this year, after more than doubling last year (to about $370 billion for U.S. leveraged loans), predicts John A. Lee, head of the Philadelphia chapter of the Association for Corporate Growth and senior managing director at investment bank Griffin Financial Group L.L.C. in King of Prussia.
Back in 2009 only two regional banks, TriState Capital Bank and Susquehanna, plus a handful of specialty lenders, such as Nate Cohen's LBC Credit Partners (part of Ira Lubert's Independence Capital Group), were bidding to help finance Griffin's sales of midmarket companies, according to Lee.
By this spring, big national lenders such as CIT, Churchill Capital, and Madison Capital (an affiliate of New York Life Insurance Co.), recovering local lenders such as National Penn Bank, and expansive regional banks such as First Niagara and M&T have shown interest in funding deals here, Lee says: "The leveraged-loan market has come back."
For some, at least. Interest still "varies dramatically with the size of the company. It's vibrant for companies north of $10 million EBITDA" (earnings, before interest, taxes, depreciation, amortization). "At $5 million to $10 million, there's not as many players, the pricing is higher," and buyers are expected to come up with extra cash to supplement borrowed money.
Building Sale Talks
Negotiations are taking place on a new deal for the sale of the former state office building at Broad and Spring Garden Streets to Philadelphia developer Bart Blatstein. Philly Deals, C3.