Interpublic Makes HUGE Bet On Digital Marketing

by , Jul 31, 2008, 7:00 AM
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Micheal I. Roth of IPGTaking a majority stake in online agency HUGE, Interpublic Group has bolstered its digital marketing capabilities.

The deal gives Interpublic an interactive shop that specializes in building sophisticated, transactional Web sites for clients such as JetBlue, IKEA, Scholastic and Time Warner Music Group. Its clients' sites together generate $3.5 billion in annual revenue and draw more than 120 million visitors a month.

"We see significant opportunities for HUGE to partner with our agencies, expand its geographic footprint and deliver their unique process and e-commerce platforms to many of our clients," said Interpublic Chairman and CEO Michael Roth, in a conference call Wednesday discussing the holding company's second-quarter results.

Interpublic yesterday also announced increasing its stake in the Middle East Communication Networks, a Dubai-based marketing services firm, to a 51% ownership. Marketing services overall account for 43% of the global agency's revenue, with the balance coming from advertising and media.

With the HUGE investment, Interpublic looks to capture ad dollars shifting not just from old to new media, but from traditional, ad-supported media to marketing via emerging digital platforms.

For its part, HUGE, with offices in New York, Los Angeles, Atlanta and London, plans to accelerate its overseas push and further broaden its client base by teaming up with Interpublic. "A lot of our clients are multinational in nature, such as Ikea, Reader's Digest and British Airways, and demand the services of a global agency," said Aaron Shapiro, a partner at HUGE, founded in 1999.

At the same time, the firm expects work with existing Interpublic clients to help build out their digital businesses from research and planning through design and ongoing management of company Web sites.

"A lot of Interpublic clients throughout the space are realizing sites are more than just (online) brochures," said Shapiro. "We saw a lot of the clients Interpublic works with have very pressing needs for the kinds of services we provide."

Despite the undisclosed "substantial" investment by Interpublic, Shapiro said HUGE would continue to operate as an independent agency under the leadership of its four partners, which also include David Skokna, Sasha Kirovski and Gene Liebel.

In similar deals where Interpublic has taken a 51% majority stake, it has gone on to acquire full ownership over a period of five years an acquired firm meets certain business milestones.

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