One of the world’s largest independent media companies is spinning out a unit to specialize in interactive media and marketing — despite a weakness in that sector.
Carat Group said its new interactive spin-off, Carat Interactive, will take advantage of the parent company’s client roster as well as the “360-degree” thinking that characterizes its media planning, buying and optimization work.
“From the client’s perspective, the service will be seamless,” said the new agency’s president, Sarah Fay. “We are very much about integrating our services, so that the client has a fully meshed media program. Obviously, an offline expertise is necessary to come together with an interactive expertise. Integration is going to be critical for interactive TV media and marketing programs.”
But the different culture, needs and capabilities of interactive media work necessitated a separate entity, Fay said.
Carat Interactive said it plans to expand beyond the usual media services offered by its parent, by getting into affinity, affiliate, and email marketing. It’s also dedicating an in-house unit, which it dubs the “Innovation Engine,” to wireless, interactive TV and other emerging media.
“It comes down to building a better service that is not just focused on … traditional online media,” Fay said.
The company said Carat Interactive represents what it says is a “new breed” of digital media agency that specializes in integrated messaging across all media. But while many cross-media companies allege the same thing, Carat Interactive has some impressive credentials to back up its boast. Its parent, Carat Group, is the world’s third largest independent media agency, claims more than $12 billion in worldwide billings and is a recognized name in print, television, out-of-door and other media services.
As a result, Carat Interactive enters the marketing arena with more than twenty offices worldwide, 150 employees, and a client roster that includes Xerox, Pfizer, and Symantec.
“The media agencies that succeed in this space will be the ones that have a global presence and the financial resources to test new media, thereby providing their clients with new and proven opportunities to ensure competitive advantage,” said Carat North America chief executive David Verklin.
While it has some big aspirations, there’s also much at stake for the agency.
In 1999, the Interpublic Group spun out its Zentropy Partners under a similar concept of focusing on interactive marketing and media, while integrating some of its client work with its parent. But in October 2000, after it missed growth expectations and axed about 15 percent of its staff, IPG re-absorbed Zentropy into McCann-Erickson.
That announcement came as the public markets started punishing other interactive consultancies — many with offerings similar to those of Carat Interactive — for poor performances following the dot-com advertising downturn. Now, many of those once high-flying firms are seeing their stock prices at their 52-week lows.
Despite the difficult environment for interactive consultancies, Fay maintains that Boston-based Carat Interactive is in a prime position.
“Carat was never a company that put all its eggs in the dot-com basket. Our clients have been the traditional clients right along, and I believe the next wave of interactive advertising will come from that group,” she said.
“Our philosophy has always been providing integrated media programs, and … I believe we are ahead of any other agency in that area. With traditional marketers using the Internet as a direct marketing tool and a branding medium, this program synergy will become more and more important. And the level of integration we provide with online and offline media services is unique,” Fay added.
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