V12 Group Building Below-the-Line Marketing Powerhouse

Oct. 07, 2005

Private V12, based in New Jersey, is focused on building itself into a below-the-line direct marketing powerhouse, said CEO Paul Chachko.

Chachko explained that below-the-line marketing was any type of marketing service where there was a means to measure the return on investment (ROI) for clients. An example would be direct mail marketing. He said the company believed the below-the-line arena was a lucrative niche, due to increased hunger from clients for consolidated marketing services and measurable ROIs, he explained.

V12 plans to be very acquisitive in the next 18 months, Chachko said. In particular, the company was looking to build up in the online arena, and was looking at search engine marketing and lead generation companies. It was also looking at off-line data base companies. "Direct marketing is starting to come back in a major way, so we want to build up our data practice just a bit more," he explained.

Other areas the company might look at included event marketing and some in-theater marketing, such as cup covers. V12 was looking to pay between USD 7m to USD 15m for the buys, he said.
Chachko claimed he had already built V12 into a USD 90m in revenues business since May through the merger of number one bill insert direct marketing business Datagence with his company Media Solutions Services (MSS). The new company, V12, then bought number two insert player, Spectra, he said. Chachko declined to disclose deal details.

V12 now owns about 70% of the insert market, and expects to do approximately three billion inserts in 2005, he said. Media channels V12 currently owns include Internet marketing, analytics, database marketing, email marketing, direct mail, and in-statement marketing. Chachko said.

The company has approximately 100 employees and three institutional backers through a preferred round: Kinderhook Capital, New Jersey Technology Counsel, and Atrium Capital. The company had no debt and was in a good position through its backers to get additional funding for buys, Chachko said.

Meanwhile, Chachko said the company was not actively pursuing a sale, but in two or three years it would be a "nice package for someone to pick up." "The exit strategy at this point is an afterthought," he explained, as right now "[they were] going through the fun part of building this thing."

V12 should be an attractive acquisition, as he claimed the company was going to own all of the different below-the-line marketing media channels and have a sizable revenue stream. "My background is I build and sell." Chachko sold his previous business, an email marketing company called ConsumerNet, to 24/7 Real Media for USD 52m.

The universe of buyers for V12, according to Chachko, would likely include data providers, such as InfoUSA, Experian, ChoicePoint, and Equifax, as well as large advertising agencies currently outsourcing their direct marketing work and looking to bring the work in-house.
by Abigail Roberts