Magnet 360 on the Inside Track
Magnet 360 Attracts Capital
StarTribune June 21, 2010
By Neal St. Anthony, David Phelps, Janet Moore
Two-year-old Magnet 360, the Minneapolis-based network of marketing agencies pooling talent and technologies for local-to-global clients, has attracted another $1 million in financing, in addition to $3 million in original equity capital invested in 2008 by a group led by Skip Gage, whose Gage Marketing is a charter member.
The new investors include Jim Schroer, former executive with DaimlerChrysler; Tom McLeod and Joy Lindsay of StarTec Investments, and businessman Mark Zesbaugh, the former CEO of Allianz Life North America.
Magnet, an affiliation of 24 agencies, expects to be profitable in 2010 on revenue of up to $10 million, founders Scott Litman and Dan Mallin said recently.
"We're a 10-person company with 25 member agencies of about 500 people delivering about $80 million in [net revenue annually]," Litman said. "We see an enormous business where marketers are spending money.
"We're like a general contractor. We call in the right people at the right time and make sure the right people get paid what they are owed by the client."
Magnet 360 clients include 3M, Carlson Marketing Worldwide, MuralsYourWay.com and a mix of other small and large clients.
Magnet 360's founders also originated the Imaginet digital marketing firm a decade ago. They sold the 110-person, $14 million-sales concern to huge WPP Group in 2001.
They hung around until 2004. But they got frustrated with the agencies inside WPP such as J. Walter Thompson, which tended not to share resources in serving clients.
Magnet 360 negotiates with clients, places the work with affiliated companies and takes a small fee. The Magnet principals take a placement fee on each job out of the "competitive rate" charged for the work by the affiliate agency.
Mallin, 44, and Litman, 43, also are the founders of the annual Minnesota Cup entrepreneur awards.
They said 2008, with ad budgets slumping amid the recession, was a bad time to start a business and build revenue but a good time to assemble a team. The ad business picked up markedly in the fourth quarter of 2009 and continues to grow.