New York-based Agency.com aims to move into the Australasian market through a joint venture with Australian ad group Clemenger Communications, despite some signs that the area may not be ready to support a large number of Web marketing players.
Agency.com, an interactive shop once largely owned by ad group Omnicom, has recently gone through some major shifts at home, becoming a part of Omnicom’s Seneca Investments, a joint venture with a venture capital firm. That ownership situation emerged because Omnicom saught to reshuffle its assets, after admitted underperformance by Agency.com and its Omnicom-owned peers’ during the past year.
Like Agency.com, other firms majority-owned by Seneca — such as Razorfish and Organic — have seen their public market valuations tumble, while announcing rounds of layoffs and restructuring amid falling revenues.
But while many in the online and marketing space are retracting in many areas, Agency.com executives say they believe that expansion into the Australian market remains a good idea — especially with the assistance of Clemenger, which is affiliated Omnicom’s BBDO Worldwide.
“Australia has a wealth of local talent and a strong demand for interactive services,” said the company’s chairman and chief executive, Chan Suh. “We see this joint venture as a logical step for both … Omnicom is Agency.com’s controlling shareholder, and Omnicom is also a major shareholder in Clemenger, so this partnership is a natural way for us to establish an Australian presence.”
The joint venture, Agency Interactive, is headquartered in Sydney and has an additional unit in Melbourne.
The new venture will also help Agency.com churn out localized campaigns for existing clients, which include 3M, British Airways, and Compaq.
Clemenger aims to be of aid in helping Agency.com find a market for its services. The company is Australia’s largest communications agency group, and has agreed to sell Agency Interactive’s services to its clients. Both partners benefit from such an arrangement: Agency Interactive lands work from traditional companies, while Clemenger agencies can offer clients one-stop shopping.
“Now that the Web and other interactive technologies are becoming part of the fabric of day-to-day business, having well-crafted and smoothly functioning applications is part and parcel of a business’s competitive positioning,” said John Young, managing director at the new venture. “Agency Interactive aims to be the service provider of choice in this field.”
Agency.com is keen to break open other markets during a time in which the U.S. environment for interactive marketing and advertising is far from healthy. However, recent efforts in Australia seem to indicate that region is not without its difficulties, with several players launching, then dropping, Australasian interactive marketing efforts.
For one, ad network 24/7 Media sold off its Sydney-based Sabela Media division to competitor DoubleClick, citing a need to shave off less-profitable units to focus on its U.S.-based operations, among other things. 24/7 Media had paid about $75 million in stock for the company, which handled ad serving for many of the region’s top Web sites.
Earlier this year , DoubleClick itself closed a media unit in Australia, and pulled back its regional technology business to Hong Kong.
Additionally, e-services consultant Sapient — which competes with Agency.com in several businesses — closed its Sydney office in March.
Those stories aside, Agency.com also faces obstacles in the form of homegrown competition. Cordiant Communications, for one, boasts a sizable interactive presence in Australia, which last year was rolled into the ad group’s Web shop collective, CCG.XM. The agency has offices in Sydney and Melbourne as well, and services clients including Unilever.