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Agency.com was one of the biggest and best-known of the interactive agencies that promised to take over the world in the late 1990s. Always one of the most level-headed and least flashy of the e-services companies, it was still among the leaders more than a decade later, after many of its former rivals had fallen by the wayside. It was aligned with Omnicom's TBWA network at the beginning of 2006, but that arrangement proved singularly unproductive. The relationship was loosened at the beginning of 2008 to allow Agency.com to focus more closely on its own clients. Yet that strategy never really worked either and Agency's lustre steadily faded over the next two years. Most of Agency.com's clients and staff were absorbed back into the TBWA fold during the course of Spring 2010. The brand was phased out altogether at the end of that year, with a handful of remaining outposts absorbed into Omnicom stablemate Designory.
Agency.com was founded in 1995 by Korean-born Chan Suh and business partner Kyle Shannon. Chan Suh had arrived in the US as a teenager and after college ended up in the marketing department of Conde Nast and later Time Warner. At Time he became marketing manager of Vibe magazine, then part-owned by Time Warner. In the mid-1990s, he orchestrated the launch of Vibe's first website. While cruising web design chatrooms he met Shannon, a former actor with a good understanding of the internet. They agreed to throw in together, and persuaded Time Warner's Sports Illustrated to be their first client in 1995. Work quickly followed from blue-chip clients such as American Express and British Airways, sealing the start-up company's reputation.
Omnicom snapped up a 40% stake in the growing business in 1996 for what seemed at the time a generous $12m. Agency.com used Omnicom's cash to fund further rapid expansion. In 1997, the company dipped its toes into the UK, acquiring a stake in leading local player Online Magic, as well as in Silicon Valley's Spiral Media. The following year it bought out the rest of both companies, as well as the interactive division of Omnicom's US PR agency Ketchum and Boston's Interactive Solutions. In 1999, Omnicom folded Eagle River Interactive, which it had acquired a year earlier, into the business, building its own stake to around 47%. Agency.com absorbed New York online media company i-Traffic the same year, Dutch agency Twinspark and a stake in Singapore's Edge Consultants
As offices blossomed around the globe, Agency.com became established as the world's biggest interactive agency. At the end of the year, with sales topping $90m, the company floated on the NASDAQ exchange, selling 25% of its equity. Omnicom's initial $12m investment had grown to a value of around $200m. The parent group celebrated by setting up Communicade, a specialist division housing its various online interests, which by then also included stakes in Razorfish, Red Sky Interactive and several other agencies. Meanwhile Agency.com continued to expand, buying up French agency Pictoris during 2000.
But that year, the internet boom turned suddenly to bust. As the scale of the downturn became apparent, Agency.com began restructuring, slimming down its operations in the US and cutting back its international network. In Spring 2001, Omnicom took the heat out of its investment in the online sector by agreeing to transfer its interactive shareholdings to Seneca Investments, a newly formed joint venture co-owned by Pegasus Partners, a private equity fund specialising in distressed businesses. (That strategy later sparked off a class action suit from irate Omnicom shareholders who claimed that the deal was designed to disguise the companies' poor performance).
In May 2001, Seneca bought out Agency.com's original founders Chan Suh and Kyle Shannon to end up with a 65% stake, and later acquired all the remaining public shares in Agency.com, taking the business private again. At the same time the agency shed around 25% of its staff and absorbed sister online agency Red Sky, one of the other agencies acquired by Seneca. Despite the setback, Agency.com set about expanding its i-Traffic subsidiary, establishing a London outpost in 2001. Also that year, Agency Republic was formed as a London-based joint venture with local Omnicom-owned digital shop Claydon Heeley Jones Mason. (It was later separated out as an independent unit, before becoming ther London office of Critical Mass). In 2002 the group absorbed another design shop, KPE, with offices in the US and UK, followed in 2004 by San Francisco online agency Exile on Seventh Street.
In 2002 Seneca also bought out the remaining public shares in another digital agency, Organic, prompting speculation that Organic and Agency.com would be merged. However in a new twist, Omnicom took back control of Organic in early 2003, and did the same with Agency.com a few months later, keeping the two businesses separate. At the beginning of 2006, Agency.com was aligned with TBWA's Tequila Worldwide network. CEO Don Scales left the agency abruptly soon afterwards, apparently following a disagreement with Omnicom over strategy, and he was replaced by David Eastman.
Eastman was also given the go-ahead to establish a broader international network. Independent Belgian agency Hypervision was acquired and became Agency.com Brussels; an Irish office was established within the group's Cawley Nea\TBWA office; and Tequila Digital in Italy was rebranded under the Agency.com banner. That expansionist strategy was abandoned abruptly mid-year following Eastman's departure (initially to London, to run stablemate Agency Republic).
Meanwhile, the relationship between other senior staff at Agency.com and their managers at Tequila and TBWA had become increasingly strained as the once proudly independent digital agency became increasingly bogged down with production chores on network accounts. Creativity suffered as well, with the result that Agency.com's reputation within the industry took a beating. Pull-no-punches insider blog Agency Spy was especially vocal in its criticism, and Agency.com earned the lowest rating of all the main e-shops in Adweek's digital report card for 2007.
Chan Suh was reappointed as CEO following Eastman's departure, and the relationship with TBWA was loosened to allow the agency to focus on its own accounts. However, there was little benefit and several important accounts were lost. Suh quietly departed at the end of 2009, and the agency's independence was finally removed when its offices in New York and London were folded into those of TBWA. In Spring that year, the Agency.com name was effectively discontinued in the US. Its Chicago office spent some time as an outpost of TBWA's e-Graphics digital production network before rebranding again in 2011 as the local outpost of another group-owned digital and branding agency, Designory, headquartered in Long Beach, California.
After taking a couple of years' break from the industry, Agency.com founder Chan Suh joined brand consultancy Prophet in 2013 as senior partner & chief digital officer. Kyle Shannon left the company after the 2001 buy-out by Omnicom and worked as a consultant for a number different venture before launching video content agency Storyvine in 2012.
Last full revision 2nd February 2018
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