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Digitas

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Digitas - known as DigitasLBi until 2018 - is one of the world's biggest pure-play digital agency networks. Part of Publicis Groupe, the business was formed in 2013 from the acquisition by Publicis of LBi and its merger into the Digitas network, purchased seven years earlier. The latter began life as a direct marketing specialist, but moved heavily into the interactive sector in the late 1990s. Still independent by the early 2000s, it extended its size and range of services in 2004 with the acquisition of another leading digital design agency Modem.Media. At the end of 2006, Publicis agreed to acquire the combined business for $1.3bn, and continued to expand the Digitas network over the following few years with the bolt-on of offices in other key markets such as the UK, France, China and Brazil. The merger of Digitas and LBi combined each network's offices in most countries. However, the continuing expansion of Publicis Groupe's digital capabilities has seen DigitasLBi's dominance gradually diminished. It remains a substantial business, but was eclipsed within the group after 2016 by the newly created Publicis.Sapient entity. In 2017, DigitasLBi was shifted out of Publicis.Sapient for reporting purposes, becoming part of Publicis Media.

Clients

Click here for a Digitas client listing from Adbrands Account Assignments

Competitors

See ranking of Marketing Services Index and Interactive Services Index.  

Brands & Activities

Following its acquisition in 2006, Digitas was positioned as the lead digital resource within Publicis Groupe, working on a standalone basis as well as in partnership with other group brands. It is particularly well-established within the US, where it is arguably the country's #1 digital brand. The subsequent acquisition of rival network Razorfish by Publicis led to a pooling of some back office resources, although the two brands continued to operate independently from one another, certainly as far as clients were concerned.

Following yet another digital acquisition by Publicis Groupe, this time of LBi at the beginning of 2013, the two businesses were combined to create DigitasLBi, combining the strength of Digitas in the US with that of LBi in Europe. Advertising Age estimated combined revenues of DigitasLBi at $730m in 2016, including $465m in the US. The acquisition by Publicis of Sapient and its absorption of Razorfish relegated DigitasLBi to the #2 position within the Groupe. By mid 2017, the combined network claimed an estate of 36 offices in 17 countries, including eight spread across the US, 17 in Europe, 7 in Asia and 4 in South Africa and Dubai. In the US, the combined agency still operates mainly under the Digitas name.

In early 2006, Digitas acquired healthcare agency Medical Broadcasting Company for around $30m. In 2007, it rebranded under the name Digitas Health. Based in Philadelphia, the company produces digital consumer and professional marketing for clients including Wyeth and AstraZeneca. Following restructuring in 2011, Digitas Health was in effect merged with the similarly specialised arm of Razorfish. Later the same year, reporting responsibility for both was transferred to Publicis Healthcare Communications Group, although they retain their original names. In 2007, a specialised digital production agency was established under the name Prodigious to supply technology production skills and support to Digitas as well as other Publicis Groupe agencies. In 2008, the group launched its own dedicated branded content arm, Third Act, to generate advertiser-funded content for the internet.

Pre-acquisition, LBi already had a presence in the US through the former IconNicholson and other agencies. Since 2013 these offices have adopted the name of LBi's social media subsidiary MRY. They continued to operate separately from Digitas, though under the overall umbrella of DigitasLBi, until 2014 when they were shifted into sister network Starcom MediaVest. MRY was originally Mr Youth, a social media specialist acquired by LBi in 2011.

Digitas already had an extensive international network, and this was further strengthened by the LBi merger. At the beginning of 2013, pre-merger, there were Digitas outposts in 15 other markets in Europe, Asia and Latin America. Following the incorporation of LBi, this footprint was initially expanded to 24 countries. (The network has more recently been scaled back in the light of the Sapient add-on). Digitas London was created in 2006 from what had originally been Modem.Media's local office. (Two years earlier, Modem.Media had itself absorbed the original UK outpost of Digitas). The UK office was bolstered further in 2009 with the absorption of the local presence of Duke, a Paris agency acquired by Razorfish that year. In 2011, the resulting business was in turn absorbed into newly acquired Kitcatt Nohr Alexander Shaw, becoming Kitcatt Nohr Digitas. It continues to operate separately from what is now DigitasLBi London. Despite the departure of CEO Marc Nohr, the agency dropped not his name but the Digitas tag, becoming Kitcatt Nohr in early 2014. However, the Kitcatt Nohr deal did not go smoothly. The independent agency's shareholders later successfully sued Publicis for misrepresenting the health of Digitas London prior to the deal. Kitcatt Nohr was eventually merged into DigitasLBi in 2017. MRY's London office adopted the old Lost Boys name in 2014. Market watcher Econsultancy estimated UK fee income of �58m for DigitasLBi in 2014, slightly down on the year before.

Various other countries also joined the Digitas network, primarily through acquisition. In 2007, Publicis Groupe launched a bid for Business Interactif, a publicly quoted digital agency based in Paris. It acquired the 49% shareholding controlled by Business's founders for €137m and launched an offer for the minority shares. Business Interactif subsequently rebranded as Digitas France. A separate unit was established in France in summer 2008 to take over interactive duties for new client Nissan within Europe. The dedicated agency operates as DNA (or Digital Nissan Agency). Digitas France has continued to expand, merging with the local LBi office in 2013, and also absorbing Publicis-owned mobile marketing agency Phonevalley. LBi France continues to operate as a separate brand, although the two agencies are effectively combined, working out of the same office in Paris.

Business Interactif also had an office in Shanghai. This was in turn bolstered by the acquisition later the same year of the country's largest independent interactive marketing agency, Communication Central Group, becoming Digitas China. In 2008, Indian agency Solutions, already a Publicis subsidiary, was absorbed into the Digitas network, becoming Solutions Digitas. It has several offices in India as well as outposts in other regional markets including Singapore, Thailand and Indonesia. Later in 2008, Digitas established its first Latin American outpost with the acquisition of Tribal of Brazil, which became Tribal Digitas.

Following the original Publicis takeover of Digitas, its CEO David Kenny was promoted to membership of the Publicis Groupe senior management board, with responsibility for interactive strategy, and he had even been considered at one point a possible successor to group CEO Maurice Levy until his abrupt departure from the group in 2010. In the mean time, he became one of the main coordinators of a number of different initiatives announced during the course of 2008 and 2009 to improve cross-group digital marketing services. These projects were designed to deliver a more rounded understanding of the digital environment among marketing executives trained primarily in offline services. Perhaps the most ambitious was a marketing alliance agreed in early 2008 between Publicis Group and Google. Under this initiative, Google agreed to share its technological know-how in exchange for Publicis Groupe's media planning and analytical expertise. Later the same year Publicis agreed to acquire search marketing agency Performics from Google.

Management

Laura Lang resigned as global CEO of Digitas at the end of 2011 to become (briefly) CEO of Time Inc. No successor was named, and during 2012 the business was run jointly by Colin Kinsella, CEO, Digitas North America, and Stephan Beringer, CEO, Digitas International (and also of Razorfish International), reporting to Bob Lord, CEO of sister network Razorfish and of umbrella unit Publicis Digital Technology. Following the merger with LBi, that agency's Luke Taylor was named as CEO of the combined DigitasLBi business. Colin Kinsella was replaced as North America CEO by Tony Weisman. However, the continual reconfiguration of Digitas, and then of DigitasLBi, especially after the acquisition of Sapient has left its impact on the management team. Luke Taylor resigned in early 2017 (and subsequently joined Omnicom). Tony Weisman quit mid-year to join client Dunkin' Donuts.

Nigel Vaz, also CEO of Publicis.Sapient EMEA & APAC, became CEO of DigitasLBi for several months during 2017, before eventually passing down that role to Michael Kahn. Other senior managers include Alan Davies (chief strategy officer), Laurent Ezekiel (global client services director), Jason Kodish (chief data scientist) and Jill Kelly (chief marketing & communications officer). Doug Ryan is North America president, supported by Joanne Zaiac (COO, North America) and Ronald Ng (CCO, North America). Ewen Sturgeon is CEO, international, supported by Chris Clarke (chief creative officer international) and Fern Miller (chief strategy officer, international).

Background

It's all quite a change from the company's debut. Michael Bronner launched his first business out of a college dorm in 1980 in order to pay for his tuition fees at Boston University. He persuaded local businesses to buy space in his University Coupon Book, offering discount vouchers to students. The book was then distributed free through student mailboxes. It was so successful that, trading as Eastern Exclusives, Bronner recruited other colleges to take part and quickly built up a network of more than 100,000 mailboxes. Widening his net, he then launched The City as a quarterly coupon book targeting employees in downtown office buildings in Boston. His big break came when American Express agreed to lend its name to a similar book offering discounts off upscale restaurants and services in Boston to local cardmembers. This eventually evolved into the card company's Membership Rewards program. Bronner set up in business with two partners in 1980 as Bronner Slosberg Humphrey, and quickly recruited AT&T as another major client.

After 15 years of success as a traditional direct marketing agency, BSH was among the first to embrace the new digital economy, launching spin-off Strategic Interactive Group (SIG) in 1995 as an add-on offering for existing clients. But as the internet economy boomed SIG rapidly began to overshadow its old-school parent. So did a second spin-off, the customer relationship management agency Sansome Group. In 1999, SIG and Sansome effectively acquired their parent to form a new group, Bronnercom. Bronner, still only 42, decided to retire from day-to-day running of the business later that year, selling most of his shares to investment firm Hellman & Friedman for $123m. (Michael Bronner launched charitable foundation Upromise in mid-2000 in order to "give something back" to society. The organisation assists families in providing affordable college education for their children with backing from major advertisers).

Following the purchase by Hellman & Friedman, the company's name changed again, this time to Digitas Inc. The business floated in 2000 with a market capitalization of $1.68bn. However the decline of the internet boom hit Digitas's sales and earnings hard. Fee income peaked in 2000 at $288m. By 2002 it had fallen by almost a third to $204m, but the agency gradually clawed back business over the next two years. In 2004, it announced the agreed acquisition of another well-known web design agency, Modem.Media, for around $180m in shares. Hellman & Friedman and Michael Bronner took advantage of the improving status of the group to sell their remaining shares during 2003 and 2004.

For many years the business of Digitas was centred around three major clients. American Express, AT&T and General Motors collectively accounted for almost two-thirds of Digitas's revenues in 1998, and the agency began aggressively targeting new clients following its flotation in 2000. Although gross income more than doubled after that, so did the spend from those three clients, and they were still by far the biggest in the Digitas portfolio by 2004, when they accounted for 59% of group revenues. In fact, the acquisition of Modem.Media, announced in July 2004, was partly prompted by the decision the same month by the old AT&T to exit consumer services. For 2005, American Express and General Motors remained the group's biggest clients accounting for 26% and 22% of revenues respectively.

In its last full year as an independent company, Digitas group reported fee income of $340m, up by almost a third on the year before. Total revenues for 2005, including reimbursable expenses, were $565m, up almost 50%. Around a third of income came from interactive, and less than 3% of revenues were generated outside the US. However the company was rocked by a string of account losses during 2006, which caused its share price to fall sharply. This allowed Publicis the opportunity of launching a bid for the business.

Last full revision 19th September 2017

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