Inside Lord Sugar’s digital venture

Lord Sugar has invested in an eclectic mix of businesses since 2011, when the prize for winning BBC show The Apprentice changed from gaining a job in his Amshold group of companies to receiving backing for an original business plan. These have included an ergonomic nail file, a recruitment agency for the hi-tech and pharmaceutical industries, a chain of skin treatment clinics and, last year, a digital marketing agency.

Each business receives £250,000 of startup funding and access to mentoring and support from Lord Sugar. In return he gains a 50% stake in the company and new market extensions for his empire. They also expose Lord Sugar, a tycoon who made his name manufacturing computers in the 1980s, to industries with which he is largely unfamiliar.

Through his backing of Climb Online, the brainchild of Mark Wright, winner of The Apprentice 2014, Lord Sugar is a player in the world of search engine optimisation (SEO) and pay-per-click (PPC) advertising – a hugely competitive market inhabited by countless agencies offering similar services.

It seems a strange fit for the straight-talking Lord Sugar, who has previously criticised marketing’s propensity for jargon^[1]. However, he insists it is an industry he has long wanted to tap. “I’m interested in technology, always have been, and despite my age I’m up to date with what’s going on,” he says. “This is a real 21st-century industry and I need to be involved in that market.”

The business has had a strong start, notching up 150 clients in its first nine months of operation. This includes a deal with coupons website Groupon, agreed last month, that will see Climb Online provide SEO and PPC services to the large base of small businesses that use Groupon’s platform.

Climb Online employs 25 people, has a seven-figure turnover and achieved profitability after two months of trading. It also has plans to open a permanent London office and double its staff and customer base over the next year.

Competing on service

This early success is partly attributable to Lord Sugar’s backing and connections, though Wright argues the agency is also carving a niche for itself within a crowded industry. The 26 year-old Australian, who worked in digital marketing prior to appearing on The Apprentice, says this involves offering a more “personal” service in comparison to rival agencies.

“A lot of customers have left big agencies to come and work with us solely because they feel like a number in these agencies,” he says. “They get croissants and coffees when they’re looking to sign up but as soon as they’re paying a monthly retainer, they’re forgotten about. One of the things we guarantee our customers is that they see a rep monthly.”

Both Lord Sugar and Wright remark on the “jealousy” they have encountered from rival agencies since starting the business. Lord Sugar’s involvement inevitably gives it a leg-up on competitors, with Amshold providing the back-room infrastructure for all the ventures that win The Apprentice, such as legal, HR and accounting.

“For anyone who starts a business, a lot of their problems are what I call the boring side of it,” says Lord Sugar. “We take that away and just leave the winner to get on with what they’re good at.”

Perhaps more importantly, Wright has benefited from Lord Sugar’s enviable contacts book. “I can phone up the CEO of every national company in the country and speak to them,” says Lord Sugar. “That’s what [The Apprentice] has done for me. Does it mean I’m going to get any business? No, because they’re business people. But I can get an audience with anyone and that’s been very helpful for the winners.”

Wright confirms that Lord Sugar’s backing has opened up doors for Climb Online, but insists the agency is also generating business of its own accord. The company has expanded its range of digital products relatively quickly, including a recent investment in a trading platform for display ads and new website and app development services.

“I sit with some massive organisations and they haven’t realised how important their website is,” notes Wright. “So many websites of big companies get thousands and thousands of visitors but they’re not getting any conversions, leads or new customers. They don’t spend enough time developing it and they make it too complex.”

Digital marketing

Lord Sugar shares Wright’s enthusiasm for digital marketing and claims he is not lacking in expertise given the growth of his existing Amscreen business. The firm, a manufacturer of digital outdoor advertising screens, recently agreed a supply deal with media owner Clear Channel.

However, while Lord Sugar sees the value of search and social media marketing (he has 4.6 million Twitter followers), he remains sceptical about other forms of online marketing. “There’s no question that Twitter it is a direct selling tool and the more followers you have, the more successful it is,” he explains. “It’s much better than these subtle [ads] that pop up on the periphery of a website because you once typed in that you’re interested in a Canon camera.

“I don’t get all that shit quite honestly. I never blame anybody for selling something, because it’s not illegal and I won’t even call it a con, but it is a total waste of money. It fascinates me the amount of money that is spent on positioning yourself on what I call secondary, peripheral, pop-up websites.”

Lord Sugar says that, ultimately, he is a hands-off business partner who affords his Apprentice winners the freedom to run their ventures as they see fit. His input primarily involves decision making around capital expenditure and, where necessary, providing advice to “keep them focused” on their business plans and targets. “It means stopping them from going off on tangents,” he adds.

So, almost one year on since Climb Online began trading, have Lord Sugar and Wright had any noteworthy disagreements? “No, because I’m always right,” says Lord Sugar with typical self assurance.

References

1. ^{^} who has previously criticised marketing’s propensity for jargon (www.marketingweek.com)