Investment firm KKR launches digital marketing operation in China

KKR has launched a digital marketing company in China, made up of four previously independent operations.

The investment firm bills the new entity, Cue & Co, as “China’s first one-stop digital marketing company”. It is made up of Qi-xin, a digital advertising agency; WIN, a brand management company specialising in lifestyle, luxury and beauty; AnG, a digital marketing company focused on precision targeting and efficiency; and Wina Tech, an SSP and commercial Wi-Fi operator.

KKR did not name specific clients of the new company, but said they include leading consumer brands, online gaming companies, internet service providers and financial institutions.

Cue & Co will be led by AnG founder Sky Shi as CEO. Shi said Cue would draw on KKR’s expertise in a variety of industries. KKR has invested more than US$3.3 billion in consumer and technology businesses in China since 2007.

KKR did not disclose the terms of the investment. In a statement, it makes clear that it sees an opportunity to provide more unified marketing services in China, where fragmentation means the digital marketing sector “still lags behind the country’s rapid digital growth and transformation in consumer habits”.

Cue & Co will use data derived from its services to provide measurement and insight, KKR said.

In the statement, the company’s head of greater China, Paul Yang, said: “We are strong believers in the digital transformation taking place in China.” Yang noted a steady rise in online and mobile consumption and consequently advertising spend.

KKR’s statement said the creation of a digital marketing company, a first for the firm, was a natural extension of its investments in the technology and consumer sectors. A regional spokesperson for KKR in Hong Kong indicated that further investments in the marketing services sector, which KKR defines as telecom, media and technology (TMT), may be forthcoming.

“It’s an interesting area for us and we’re always on the lookout for interesting opportunities,” the spokesperson said.

Other investments KKR has made in the sector in Asia include 58 Daojia, part of 58.com, an online marketplace; Emerald Media, a provider of funds to media and entertainment companies; Suishou Technology, an online wealth management service; and Ticket Monster, a Korean ecommerce platform.

The move comes at a time when traditional advertising agency holding companies are under increasing pressure as a result of client spending cuts, demand for transformation and new sources of competition. It follows the surprise acquisition of ADK, Japan’s third-largest advertising agency, by Bain Capital in December 2017.