Acquired By LBi, Mr Youth Gets Ready to Go Global

The first thing you notice when you enter the Mr Youth office is the lime-green color scheme—they pull it off, no small feat. The second thing you notice is that they definitely live up to their name. Mr Youth’s office looks like it could double as an Americorps recruitment center; the median age of the employees seems to hover around 25. And even social marketing vets, like VP of Marketing Christian Borges, have an undeniable buoyancy to them. All that makes sense when you meet “Matty B” or, if you prefer, Matt Britton–Mr Youth’s beaming, humble and optimistic CEO, who’s built his tiny agency into a social marketing force with $25 million in annual revenue. Last month, LBi acquired Mr Youth for a cool $40 million.

The acquisition of Mr Youth made a lot of sense for LBi, the world’s largest global independent agency. LBi is reorganizing their agency around customer segments and Mr Youth beefs up their unit, targeting millennials while improving their social media skills across the board. It’s not just Mr Youth’s expertise that’s valuable; they also bring their robust RepNation network, which mobilizes thousands of youths as advocates for brands. Mr Youth’s unique ability to scale social influence was extremely appealing to LBi, and now that Mr Youth is being inserted into LBi’s worldwide network, Britton believes that Mr Youth “will become a global brand in 2012. Asia, Europe, everywhere.”

Impressively, Mr. Britton saw the power of youth marketing in the digital age before most anyone else. He was a college student and club promoter in 1997 when he founded the Magma Group, a college marketing firm focused on the hi-tech industry. Magma’s tactics were anything but hi-tech, though. “They hired us to drive the registered user base–EBay, Lycos, Yahoo!—because that would drive their valuation on Wall Street,” Britton recalled. “The way we did that was through networks of college kids, who, actually through paper forms, get people to sign up.”

Mr. Britton, named to Entrepreneur Magazine’s “30 under 30” list in 2000 for his tremendous work, sold The Magma Group in 2002 and founded Mr Youth with Paul Tedeschi that same year. In 2004, Britton’s nimble five-person team got their first big chance: a pitch for a shot to launch Victoria’s Secret Pink, which would be aimed at a younger demographic.

“We just had a great connection with the folks who were launching the brand,” Mr. Britton recalls. “We actually got to pitch Les Wexner, who’s the chairman of Victoria’s Secret, one of the richest men in the world, and I’ve never had a pitch that big since. I thought, ‘Wow, this is what it’s like, flying in million dollar jets and pitching billionaires?’”

“It was just luck and timing, we had a great idea, which was to build this three-story high box off Ocean Drive Miami—this huge gift box with a countdown clock and no one knew what it was—and when the clock struck zero, we had all these super models come out and the line had been launched—Pink.”

The Victoria’s Secret Pink campaign was a colossal success as Pink became one of the fastest growing brands in the history of apparel. The campaign earned myriad awards, including the International Globes Award for “Best Use of Event Marketing,” and put Mr Youth on the map. Mr. Britton even found himself on The Daily Show.

Soon after winning Pink, Mr Youth won another big project with Microsoft to create a student ambassador program. “That was the impetus behind our RepNation platform,” Mr. Britton explains, “Which is our student ambassador word-of-mouth network, which really sort of transformed our business.”

RepNation’s approach—scaling student ambassadors as a marketing model using both offline and online marketing channels—was the difference-maker for Mr Youth, giving them something no one else really had: a surefire way to get youths to adopt and spread campaigns through social media.

“For clients like Coca-Cola or P&G, we build these massive distributed networks of influencers–teens, college students, young moms–to drive advocacy offline and online. That’s a core offering we had, and that’s been a tried and true offering for our clients that’s really worked.”

The agency saw steady growth of 20-30% each year, with no account generating more than 20% of their revenue, providing rare stability. When the economy tanked in late 2007, though, Mr Youth faced serious adversity for the first time.

“In January 2008, the phones just stopped ringing,” Mr. Britton sighed. “Everyone [out there] was scared. No one knew what the hell to do. We had to lay off 15 people in one day. That was the hardest day I’ve had here.”

The layoffs stabilized Mr Youth’s finances, and Mr. Britton bought out Mr. Tedeschi, his original partner, closing a private equity deal with Alta Communications and The Mustang Group. The private equity holders helped Mr. Britton bring in a new CFO to guide the company’s path forward and allow the agency’s steady growth to continue.

From there, the accolades kept coming. Promo Magazine named Mr Youth one of the Top 5 Interactive Agencies in the US in June 2009; Mashable named Mr Youth “Social Media Agency of the Year” in December 2009; and in March 2010, ranked Mr Youth #7 in their Top 10 most innovative advertising/marketing companies in the world feature.

Early this year, Mr Youth invested several million dollars to launch Crowdtap, “an online participation platform where brands can get consumers to do things for them.” The service was a breakout hit at South By Southwest Interactive (SXSWi), and they raised an $8 million Series A funding round this past June, spinning Crowdtap off into its own company, strengthening their standing as the leading innovators in social influencing.

Though Mr. Britton realized this year that Mr Youth had outgrown the small-agency bucket and was starting to come up against larger agencies, he wasn’t looking to sell the agency when LBi—stationed just three blocks away on the other side of Union Square—came knocking. But for Mr Britton, the deal just made sense.

“I needed a strategic partner with the infrastructure to help me take [Mr Youth] from a $25 million business to a $100 million business,” he explained. “Could I have done it on my own? Yes. But it would have taken 20 more years to do. And there’s such a big opportunity in the marketplace right now that I wanted to seize it.”

LBi “wasn’t looking to touch anything” in terms of how Mr Youth operates, and would allow Mr Youth to immediately scale across LBi’s $233 million worth of global accounts.

Looking towards 2012 and beyond, Mr. Britton sees big things not only for Mr Youth, but the digital/social space in general. He believes that with the launch of Apple TV, as people just watch shows with the click of a button and don’t tune into regular programming, “the mass media market will become proliferated and fragmented.”

“Take any big brand out there that’s spending $60-$70 million on up-fronts with the television networks, those television networks won’t have the audience mass. What are those brands going to do with all that money? They’re going to have to figure out ways that they can still create scale and engagement. And that engagement is going to come through advocacy and engagement, and that engagement is going to come through engagement and advocacy of other people.”

“People are going to become the new networks, so agencies that can finesse people are going to be the agencies who can create scale for client marketers, and we’re going to continue with our advocacy support to go in that direction.”