Dotdigital Acquires Social Snowball

Dotdigital acquired Social Snowball ☃️ for $20M upfront + $15M earnout.

Here are the highlights, and what it means for the influencer marketing industry:

𝐁𝐮𝐲𝐞𝐫 𝐏𝐫𝐨𝐟𝐢𝐥𝐞
• Dotdigital, a British customer experience and data platform (CXDP).
• Founded in 1999.
• 4,000+ customers.
• 452 employees.
• 5 acquisitions to date.
• £231.1M GBP ($316.7M USD) market cap.

𝐓𝐚𝐫𝐠𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐥𝐞
• Social Snowball ☃️, an influencer, affiliate, & referral marketing platform for e-commerce brands.
• Founded in 2020.
• Raised an undisclosed amount across 2 funding rounds.
• Has worked with 2,500+ brands, e.g. True Classic, Kizik, and G Fuel.
• 27 employees.
• FY24 revenues of $3M, up 200% YoY.
• Run rate revenue of $5M+ and cash flow positive at the time of acquisition.

𝐃𝐞𝐚𝐥 𝐒𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞 & 𝐂𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧
• $20M cash upfront.
• $15M earnout paid over 2 years if Social Snowball maintains its historical growth rate at sufficiently accretive margins.
• Valuation: 6.7x on FY24 revenue / 4.0x on revenue run rate at closing.
• If max consideration of $35M is achieved, the final revenue multiple will be < 2.0x run rate revenues.

𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐑𝐚𝐭𝐢𝐨𝐧𝐚𝐥𝐞
• Adds complementary influencer, affiliate, and referral marketing capabilities to Dotdigital's offering.
• Strengthens Dotdigital's Shopify channel partnership.
• Increases the group's TAM and offers opportunities to expand Average Revenue Per Customer via cross-selling and up-selling.

𝐖𝐡𝐚𝐭 𝐝𝐨𝐞𝐬 𝐭𝐡𝐢𝐬 𝐦𝐞𝐚𝐧 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐢𝐧𝐟𝐥𝐮𝐞𝐧𝐜𝐞𝐫 𝐦𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐲?

1️⃣ Influencer marketing M&A is heating up.

This marks the 5th influencer marketing SaaS acquisition so far this year, and the 10th IM transaction overall. Expect several more to come, as the game of musical chairs continues.

2️⃣ More cross-border transactions.

Social Snowball gives Dotdigital greater access to the U.S. market and is part of a broader trend of global M&A activity.

3️⃣ It's helpful to have more public comps.

Most creator economy acquisitions occur between private companies, so valuations and deal terms are undisclosed. But we're starting to see more public comps, which provide useful data points as other parties look to do deals in this space.

Congrats to the Dotdigital and Social Snowball ☃️ teams!