Modem Media

Modem Media : advertising & marketing snapshot

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A pioneer of the internet boom of the 1990s, Modem Media was acquired by marketing services group Digitas in 2004, and as a result became a subsidiary of Publicis Groupe three years later. It was merged with the digital division of the latter's Publicis Dialog network to form Publicis Modem. Prior to that merger, it operated three offices in the US, and one in London, offering a wide variety of digital services including website design and build, online advertising and promotion. It was best-known for customer relationship portals and e-commerce sites such as those created for General Motors and Delta Airlines, which it first introduced in the late 1990s. Martin Reidy, the former head of Digitas in San Francisco, was appointed as president of Modem Media in 2004, and was subsequently named as the first CEO of the merged Publicis Dialog and Publicis Modem (see separate profile).

Modem Media was formed in 1987 by 25-year-old GM O'Connell - always known by his first two initials - with partners Doug Ahlers and Bob Allen. O'Connell had spent the previous two years as product manager for online shopping mall Comp-u-mall (later part of Cendant), and Modem Media was arguably the first marketing agency set up to specialise in multimedia services. General Electric was their first client, employing the fledgling company to work on its GE-nie electronic shopping mall, a rival to Comp-u-mall. That introduced new clients including Godiva chocolates and JC Penney. Modem Media's assignments mostly involved creating CD-ROMs, telephone voice-response marketing or fax-on-demand services, but gradually in the early 1990s Modem Media became one of the pioneers in the newly emerging internet. It claimed numerous firsts, not least production of the first-ever advertising on the internet (for AT&T) and the first offline marketing to carry a URL and email address, the first affiliate programme, and the first relationship-oriented membership site, all for Coors. FCB parent True North acquired the company at the end of 1996. A year later, the same group's acquisition of Bozell brought rival interactive unit Poppe Tyson into the group. Originally a traditional ad agency (formed in 1924), Poppe Tyson had reinvented itself as an interactive business in the 1990s. Online ad sales house Doubleclick, a subsidiary of PT, was floated off in 1998 and the two heavyweight interactive businesses were merged under the name Modem Media.Poppe Tyson (MMPT).

During the subsequent internet boom, MMPT became one of the top three digital ad agencies worldwide (alongside Agency.Com and iXL). At the end of 1998 True North floated around 15% of MMPT's stock, and used the proceeds to acquire a string of other digital agencies in Japan, Germany, France and Brazil. It also launched CentrPort, a company collecting customer information online, although most of this business was sold in 2000. In 2001, the agency dropped the Poppe Tyson tag from its name, becoming Modem Media once again. Following a series of further stock offerings, True North's stake had reduced to 43% by mid-2001. This shareholding was inherited by Interpublic in 2001 with its takeover of True North. By now the online environment had become increasingly challenging. As a result of reduced business, the group announced it would close offices in Toronto, Munich and Hong Kong in 2002, and later in Brazil as well, leaving two offices in the US, and one in the UK.

Following increased losses of $7.5m in 2002, largely as a result of the closure of its international offices, the group reported a modest profit of $5m for 2003 on sales of $61m (down from a 2000 high of $130m). That year, Modem Media's two biggest clients, General Motors and Delta Airlines, accounted between them for more than a third of the agency's revenues. Modem's founder GM O'Connell announced he would retire from the company in early 2004. At the same time, Interpublic announced plans to sell its remaining shares in the business. The stake was sold at the end of 2003 for around $60m. Finally, in 2004, Digitas agreed to acquire Modem Media for around $200m in stock.

O'Connell left the business in 2001 after it became part of Interpublic. He spent several years in Argentina, where he co-founded digital production consultancy Tango Modem.

Last full revision 21st March 2018

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