• by Mark Walsh  @markfwal, November 1, 2006

Continuing its global expansion, Avenue A/Razorfish, a unit of aQuantive, has acquired Hong Kong-based interactive agency e-Crusade for $2.95 million plus future payment based on e-Crusade's performance over the next four years. The deal gives Avenue A/Razorfish a foothold in Asia and follows recent deals extending the company's presence into Europe and Australia.

Founded in 1999, e-Crusade has 43 employees, including a new five-person office in Shangai, and high-profile clients including Nike, Coca-Cola and Xbox. The company is already profitable and expects net revenue of $500,000 to $600,000 for the rest of 2006, which would equate to about $3 million annually.

"China offers a significant business opportunity, and it's a market where our clients want us to be," said Clark Kokich, worldwide president of Avenue A/Razorfish. In particular, he noted that China has had a five-year online advertising growth rate of more than 50%. Kokich also said that e-Crusade was an attractive acquisition target in the region because of its strong client base, profitability and cultural fit with Avenue A/Razorfish. "It was a pretty straightforward decision," he said.

Snapping up e-Crusade is the latest step by Avenue A/Razorfish and parent aQuantive to expand into key global markets. In the last year, it has acquired NDA in the U.K., Amnesia in Australia, and most recently, Neue Digital in Germany. Analysts viewed the e-Crusade acquisition as a positive step by aQuantive in gaining a truly global presence.

"This is yet another example that aQuantive is executing on its international expansion plans as promised," wrote Merrill Lynch analyst Lauren Rich Fine in a research note issued Tuesday. "The timing is propitious given our expectation that overseas online ad growth will be even faster than the U.S."

WR Hambrecht analyst Denise Garcia said the company's roll-up strategy was helping it better compete with the large ad holding companies such as WPP Group and Omnicom. "For investors, it legitimizes their business, not as a small digital agency, but as a business able to scale and grow across multiple borders," she said. Already, aQuantive's expansion had helped it to land new accounts, including retail giant Best Buy, she said.

Garcia surmised that the company may add one or two more digital agencies in France or Italy, but that its buying spree was mostly complete. With the move into Asia, "I think they're fairly well covered now," she said.

Disclosure of the e-Crusade acquisition comes only two days before the company is to report third-quarter earnings.