Baleon-backed Avenue Z buys The Snow Agency, as PR and digital media merge

Avenue Z, a Miami-based strategic communications and media consultancy backed by Baleon Capital, is expected to announce its launch later this morning, along with its acquisition of the The Snow Agency.

PE Hub conducted an exclusive interview with Jon Kaiden, chairman and managing partner of Baleon Capital, and Jeffrey Herzog, CEO and chairman of Avenue Z.

Previously, Herzog founded other successful agencies, among them iCrossing, which was acquired by Hearst Magazines for $450 million back in in 2010.

“What I see right now in the digital marketing space is obviously continued evolution of new channels for people to explore and find information to connect to the brands,” Herzog explained.

From search engines to social media and now to generative AI-powered tools like ChatGPT, the communications sector keeps evolving, and it’s essential for companies in the field to adapt quickly.

Generative AI creates new channels, and through those platforms, Avenue Z will enhance its ability to know what its clients are seeking and then deliver the content to amplify a brand. “That’s the future of advocacy,” added Herzog.

“The opportunity that I see today is that the industry of public relations is going to merge or converge with digital media,” said Herzog. “I see two large industries converging, and I see a new way for influence to be established across all channels, [including] search engine, social media, ChatGPT and other AI channels, and we are going to make those connections for large brands.”

The digital marketing ecosystem represents a multi-billion dollar industry.

On why it is important for companies to use multi-channels in their communications in today’s market, Herzog said:

“It’s very noisy out there,” adding that new strategies are now required to meaningfully elevate a brand. “Traditional PR measures would only get you in one channel, modern PR and digital medium opportunities that Avenue Z delivers bring messages across all channels in today’s modern world.”

Kaiden and Herzog have worked together on a number of prior investments, including iCrossing. With this new effort, Kaiden said there is potentially going to be pent-up demand for strategic communications.

“Jeff just has this unbelievable ability to build a team and attract good talent, motivate them every day once they are inside the tent, and then work closely with the outside, such as the marketing executives, to build their brands,” Kaiden said.

Among a variety of clients, Avenue Z is looking forward to working with companies from climate tech, frontier tech, fin tech, health tech, space tech, among others, offering them a suite of services such as public relations, SEO and web development.

To achieve this, Herzog said Avenue Z is developing proprietary technologies, including tools for measurement and management of media strategies. “We don’t only create this influence; we measure and manage the influence and improve it over time. Avenue Z is a company where marketing meets technology, data science and analytics,” he said.

The company also announced its first acquisition of The Snow Agency, a social media marketing company that was founded by Jonathan and Daniel Snow. Snow’s social media expertise fits into Avenue Z’s broader strategy of helping brands in a multi-channel manner.

The company is looking forward to both organic and inorganic growth strategies. With this acquisition, Avenue Z said it plans to hire over 100 publicists, content creators, media buyers, marketers and data analysts by the end of year.

“We will build ourselves internally, recruiting the right people, but we are also very open to making acquisitions for skill set enhancement. We want to be a well-rounded agency to the brands that we are servicing,” Kaiden said.

Even though the country is battling economic challenges due to high inflation and high interest rates, the pair said there could be underlying opportunities in such an environment to tap into.

“Ultimately in a downturn, companies need to market themselves and position themselves even more importantly, and so we think there’s opportunities in the downside market too,” Herzog said.

“Market volatility creates opportunities,” said Kaiden in reference to making acquisitions, as some agencies will be seeking capital or wanting to be part of a larger organization.

When asked about what level of returns Baleon hopes for, Kaiden said the current focus is on laying a foundation for the business:

“If you build a great business, the returns will be there for everybody.”

Demand for strategic communications is rising, and PE firms are investing. PE Hub has covered other deals this year, including KKR‘s  growth investment in FGS Global, a global strategic advisory and communications consultancy based in New York, and Broad Sky Partners’ investment in Bully Pulpit Interactive, a Washington DC-based organization that focuses on the “persuasion business,” including strategic communications and public affairs.