• by Adam Herman , May 13, 2002

Although large and successful in just its third year, Carat Interactive knew there was something missing from its arsenal of interactive media and marketing services. So to help round out its portfolio, the agency acquired Lot 21 and Vizium in January of this year in order to tap into Lot 21’s award-winning creative ability and emerging-technology know-how and Vizium’s customer relationship management skills.

"What Lot 21 and Vizium bring to the table is that they are so proactive," says Carat Interactive president Sarah Fay. "They talk a lot about the big idea, trying to push clients to the next level. They are squarely positioned in the interactive space and their philosophy of ‘ideas attached to increased results’ really fits with Carat’s thinking." Other benefits for Carat include a greater presence in the San Francisco market (Lot 21’s base of operation) and a pumped-up client roster with the assumption of Lot 21’s top-flight accounts.

"The best validation of our acquisitions has been our own clients, who have been looking for these expanded services," says Fay. "We have been able to quickly integrate these companies into Carat, which is a testament to what a good fit they are. Since the acquisitions, 10 preexisting accounts have signed on to our new eCRM service and several more have used our new creative arm, Lot 21 Studios." Carat kept the Lot 21 name for creative development, believing it carries recognition and respect in the online marketplace. Fay has been connected to Carat Interactive from its inception. After a start as a rep selling technology magazines, in the early ’90s she became a principal of Freeman Associates, a five-person agency specializing in media buying for technologies companies.

Fay got her first taste of the interactive space in 1995, when the agency was hired by AOL to handle its subscription sign-ups. When Freeman Associates was hired by Gillette to launch its MACH 3 razor and subsequently was taken on by RadioShack, it attracted the interest of Carat, one of world's largest independent media agencies. The agency soon became Carat Freeman, where Fay served for six years as managing director of the interactive services and B2B media divisions. In 2001, Fay was tabbed to head up a new division, Carat Interactive, and given the charter to "do what it takes" to make Carat a top player in the interactive field. "Carat Interactive is less of a spin-out and more of a spin-in with Carat," she says.

Today Carat Interactive is the sixth largest interactive agency, according to MEDIA Magazine’s Top 50 agency ranking, and the winner of numerous agency awards. With a 90-person staff and online billings approaching $120 million, Carat is headquartered in Boston, and has offices in New York, San Francisco, and Los Angeles. Business has been on the upswing as the agency recently picked up the online planning and buying for Hyundai and KIA, the $500 million Korean car account that was awarded to The Carat Group.

"We often go into joint pitches with Carat," said Fay, "because, from the start, clients are concerned about integrated efforts within their own marketing departments as well. With our seamless approach we don’t have to explain things on a medium-by-medium basis." Some of Carat Interactive’s clients who have signed on to this approach include Adidas, AT&T Broadband, Bank of America, Hewlett-Packard, Lifetime TV, NetRatings, RadioShack, Pfizer, TiVo, and Xerox.

"Our clients rely on us to tell them where to spend their dollars," said Fay. "They trust that we understand their business and will recommend the best solutions possible. Our planning process is very similar to the disciplines found in traditional media — it’s all about research. We can almost be considered a research agency that does media." The Carat Insight division generates research that is available to all Carat Group properties; Fay’s planning group will use its online survey service Voxpop to provide psychological profiles on how consumers consume media.

Another tool of Carat Interactive is Carisma, which gives planners in-depth target audience segmentation information. "Our objective is to go after the right person with the right message," said Fay. "The Internet space is on steroids compared to traditional when it comes to specifically targeting an audience. We can take it to a higher or deeper level when it comes to targeting. We call it micro-segmentation."

A good example of how Carat was able to move a straight media buy to a much bigger integrated marketing effort, affecting both the client and the media, is with the RadioShack Jimmy Neutron Game. It began with a media buyer for Carat and a sales rep for Nickelodeon discussing a cable buy for RadioShack. From there, an idea was conceived to tie RadioShack in to the launch of the Nick-produced movie Jimmy Neutron. Taking it one step further, RadioShack manufactured a radio-controlled Jimmy Neutron car in time for the holiday season to complete the cross-marketing effort.

At that point, Carat Interactive joined with the offline media teams to develop an integrated media plan to build awareness around the Jimmy Neutron remote control car products and the movie. Since the car featured in the film was available exclusively at RadioShack, Carat Interactive developed a co-branded sweepstakes on a top kids’ website to surround a unique multimedia game featuring RadioShack’s Jimmy Neutron car. The game generated over 1 million plays from kids during the critical holiday shopping season, and the car sold out at the online store.

"Campaigns such as the one we did for RadioShack exemplifies our new motto at Carat — Digital Marketing That Moves Business," summed up Fay.