• by Ross Fadner , June 3, 2004

Modem Media participated in the Friedman Billings Ramsey 8th Annual Growth Investor Conference in New York on Thursday--discussing its client roster, offering case studies involving clients Michelin and Delta Airlines, and highlighting earnings over the past three years.

Modem CEO Marc Particelli presented two case studies under contrasting circumstances. The Michelin case revealed that Modem was able to help redesign the Michelin site and reduce management and Web infrastructure costs, while driving more traffic to the site through an integrated campaign. As a result, Web traffic increased 50 percent, while purchasing intent grew by 85 percent. The campaign influenced $100 million in retail sales for Michelin, while saving the company $1 million per year in reduced operational costs.

For Delta, Particelli revealed that the airline giant continues to be Modem's most devoted customer, despite the fact that the company is close to bankruptcy. "Delta is our largest client," he said. "They use virtually every one of our services." Year-over-year, he said, Delta has grown from 11 percent in 2001, 17 percent in 2002 and 22 percent in 2003 of Modem's business. In the first quarter of 2004, Delta accounted for 23 percent of Modem's business.

Particelli noted that the agency's priority is to grow Delta.com as the airline's primary channel for ticket sales, as each sale on Delta.com saves $8-$12. Sales on Delta.com accounted for 20 percent of Delta's sales in 2003, while third parties like Expedia and Travelocity accounted for 25 percent of its sales.

Modem's Chief Financial Officer Frank Connolly noted that the Norwalk, Conn.-based agency's revenue has been down year-over-year since 2001. Revenue peaked at $97 million in 2001, fell to $70 million in 2002, and dropped again in 2003 to $61 million. Particelli claimed that this is consistent with the flux of the industry. He said that while overall Internet spending may have increased in 2003, the increase is "a little misleading." Internet advertising growth was disproportionately led by the 50 percent growth in paid search, followed by a 17 percent growth in classifieds. Display advertising, which Modem specializes in, declined in 2003. Particelli did note, however, that all three sectors are on the rise so far in 2004, although search continues to improve at a faster rate.

Modem's blue chip client list includes Heineken, America Online, Unilever, Delta, Charles Schwab, Sprint PCS, Phillips, Hewlett-Packard Co., IBM Corp., Home Depot, Kraft Foods, and Michelin, among others.