• by Gavin O'Malley  @mp_gavin, March 7, 2007

Continuing its international expansion, Avenue A|Razorfish, a unit of aQuantive, is buying Paris-based independent interactive agency Duke.

Duke--which will retain its brand identity and existing management team--joins Avenue A|Razorfish's growing international digital marketing family, which includes offices across the U.S. as well as Australia, Hong Kong, China, Germany, Japan and the United Kingdom.

In the last year, Avenue A|Razorfish has acquired DNA in the U.K., Amnesia in Australia, and most recently, Neue Digital in Germany. A deal with Digital Palette added offices in Tokyo and Kobe.

Founded in 1999, Duke's client list includes Sony PlayStation, Nissan, McDonald's, Nike and Procter & Gamble, among others. This is new territory for Avenue A|Razorfish, which until this point has conducted no business in France.*

Enticed by the global reach of online communities like YouTube, clients are looking for digital agencies with a presence in a variety of markets.

"International Internet advertising is growing even faster than the U.S., so [parent aQuantive's] increased emphasis on overseas deals ... are a positive in our view," wrote Merrill Lynch analyst Lauren Rich Fine in a recent research note.

"Teaming with this talented group provides our growing international organization a means to serve multinational clients' needs in France and beyond," explained Clark Kokich, worldwide president, Avenue A|Razorfish.

Under the leadership of Christine Santarelli and Matthieu de Lesseux, co-founders and co-presidents, Duke is profitable--and expects net revenue of approximately $12-$14 million for the remainder of 2007.

While a cash payment of over $6 million was paid as upfront consideration on the earn-out, the total purchase price, payable in cash, will be determined by an earn-out arrangement based on profit contributions from Duke over the next three years and Duke's net asset value on March 5, 2007.

Avenue A|Razorfish has seen profits and prospects rise with international expansion this past year through its global acquisitions. Last month, it struck a partnership with Dentsu to open an office in Japan, and before that acquired Hong Kong-based interactive agency e-Crusade for $2.95 million.

Last month, aQuantive reported strong fourth-quarter revenue--up 53% year-over-year, while profits nearly doubled. (The digital marketing company's revenue for the quarter was $133.4 million--up from $87.5 million. Net income was $20.4 million, up from $11.6 million.) The company's digital marketing unit, which includes Avenue A|Razorfish, saw revenue of $80.6 million--up 50% from the same period a year before. Operating income was $20 million, doubling year-over-year.

In addition, Avenue A|Razorfish's media billed surged 34% last year to $418 million, according to the company's "2005 Digital Media Outlook," release last year. Overall, the agency purchased media on 728 Web sites--up from 654 in 2004.

Some 56 of those sites, or about 8%, accounted for more than $1 million each in billings. Last year, 26 sites--around 4%--represented more than $1 million in billings, the agency reported.*

* This paragraph was changed after the article was posted.