Email marketing agency folds with debts of $2m and just $97 in the bank
Email marketing agency Raedium Digital has ceased trading with the company owing creditors and staff more than $2 million, Mumbrella has learned.
Liquidators are investigating the failure of the Melbourne-based operation, with some creditors understood to have been chasing outstanding invoices for months.
According to documents seen by Mumbrella, agency creditors include Mindshare Melbourne, which is owed $27,000, performance marketing firm Voban Digital, which is $22,533 out of pocket, UK-based One Click Wonder which is owed $62,500 and online marketing firm Permission Corp which has unpaid invoices totalling $31,368.
Liquidator PKF Melbourne listed upwards of 50 creditors, the largest of which is the Australian Tax Office which is chasing half a million dollars from Raedium.
The company has been owned and operated by Ranil Rajapaksha since 2008, although the Raedium name was not registered with the Australian Securities and Investments Commission (ASIC) until 2013.
Documents lodged with ASIC show the agency’s five staff are owed around $450,000 in wages and superannuation. Among them are former group sales manager at Australian Radio Network Trent McKeown, who joined Raedium in late 2019, and director of sales and operations Ross Koenders who is owed almost $150,000.
Ross Koenders has formed a new agency, Blue Phoenix Digital
Koenders, former Raedium media director Diogo Soares de Albergaria and director of sales Owen de Vos have already launched a new venture, Blue Phoenix Digital Media (BPM).
Raedium’s campaign manager Jessica Young has also joined the business.
Raedium, which has worked on email campaigns for several big name brands including Ford, Carnival Cruise Lines, Tourism Tasmania and the Victorian Government, went into voluntary liquidation at the end of March after it ceased trading in late February, according to PKF.
“The company traded [as] an online marketing services business which specialised in connecting advertisers with target audiences,” the liquidator said in its report to creditors. “It is understood the company ceased trading in February 2021 after the director sought advice regarding the inability of the company to meet its obligations, including an amount owed to the Australian Taxation Office and outstanding employee obligations.”
Liquidators Jason Stone and Glenn Franklin will produce another report within three months after “investigating the company’s affairs, potential recovery actions and the likelihood of a dividend contribution”.
Documents revealed Raedium had just $96.96 in its bank account.
But they also show the company had numerous debtors with the business owed around $400,000 by clients.
That includes nearly $117,000 owed by Mindshare, $65,450 by Initiative, $24,750 by Carat Melbourne, $32,175 by Mediacom and $36,234 by Nunn Media.
Nevertheless, with Raedium owing so much to suppliers and staff it was clear the firm could no longer continue trading.
Creditors who spoke anonymously to Mumbrella said they had been chasing invoices for several months, suggesting cash flow had become an issue for Raedium way before it conceded defeat.
Ranil Rajapaksha
Rajapaksha declined an interview request by Mumbrella.
One source who worked closely with Rajapaksha told Mumbrella: “Ranil is an eternal optimist. Tomorrow was always going to be better. ‘We just need to get through today and tomorrow will be better’. That was the mindset.
“Fundamentally, Covid killed the business. He was trying his hardest to make ends meet and make it work but clearly he couldn’t keep it going.”
It is understood the agency’s forward bookings were decimated by the lockdowns and general market uncertainty caused by the pandemic. It is estimated to have achieved only 35% of expected revenue in 2020.
The snap five-day Melbourne lockdown in mid-February appears to have been the final straw with the agency losing 60% of bookings overnight, Mumbrella was told.
“Email marketing is a very small part of the media budget, and, in truth, a bit of a luxury when it comes to media spend,” one source said. “Companies like Raedium are also not in a position to dictate terms. Terms are dictated to them so if a client wants to cancel a booking, they cancel a booking.”
While liquidators will, as a matter of course, investigate whether Raedium may have traded while insolvent, company directors across Australia battling the impacts of COVID were given a degree of protection last year through the Coronavirus Economic Response Package Omnibus Bill.
A section in the bill inserted into the 2001 Corporations Act granted temporary relief for financially distressed businesses.
“From a corporate view, the temporary amendments provide relief for directors from potential personal liability for insolvent trading in certain circumstances,” ASIC said.
The collapse has left several small operators out of pocket and angry that Raedium had racked up so many debts before accepting the game was up.
One creditor said: “Even a week before they went into liquidation Ranil called me and apologised but said he had a good pipeline of work, with some amazing government campaigns. He asked if I would be interested. I said it would be nice but he’d have to clear the balances first. He dangled a carrot, and had we taken it we’d have been in even more debt.”
Other agencies owed cash by Radium include On Deck, OMD Brisbane, cloud technology specialists Killer Cloud, Initiative Perth and Salesforce.
On its LinkedIn profile, Raedium is described as specialising in “meaningful connections between government/brand messages and people who want to hear from them via email”.
It adds: “The 2020 revolution has bought about the evolution of media channels that will stand the test of time and were relied upon in moments of crisis. We are here to share our knowledge and key insights to Government departments and brands on the true power of meaningful connections via Email.”
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topics
Carat
email marketing
Ford
liquidation
media agencies
Mediacom
Mindshare
One Click Wonder
Permission Corp
PKF Melbourne
Raedium Digital
Ranil Rajapaksha
Ross Koenders
Trent McKeown
Voban Digital
