Agency.com Gobbles Up Exile On Seventh

Agency.com has acquired certain assets of San Francisco-based online agency Exile on Seventh, whose clients include eBay, 21st Century Insurance and Wells Fargo. The creative firm will be merged, along with Agency.com’s itraffic brand, into a new specialized practice called the Advertising Group.

Execs at Agency.com, a subsidiary of Omnicom, declined to share the dollar value of its acquisition or to estimate the revenue Exile on Seventh would contribute to its bottom line.

The move was motivated by recent signs of growth in online advertising and a corresponding leveling of demand for Web site development, according to Agency.com President and COO Don Scales.

“We’re seeing a real up-tick in the interactive advertising side of the business,” Scales said. “The Web development side is stabilized, but the real opportunity is to continue to grow advertising.”

The Exile on Seventh brand will be retired and subsumed into Agency.com’s identity, and its staff and operations will be transferred to its new parent’s San Francisco office. Agency.com also said it will merge its itraffic online advertising division into the Agency.com brand by the end of this year. Itraffic offices in New York, Chicago, Dallas and San Francisco will be transformed into a new, specialized Advertising Group, which will include Exile on Seventh.

The London itraffic office will retain its identity, the company said.

All 16 Exile on Seventh employees will be retained, including President Alan Burgis, who will become a senior VP at Agency.com. Burgis has held posts as managing director of McCann-Erickson’s San Francisco office, chairman of FCB Australia, and CEO of Euro RSCG in Australia. On the client side, he was marketing director with Frito-Lay and Bristol-Meyers in Australia.

“Alan Burgis has a lot of years in the business, including a lot of offline experience. He’s going to bring a new sense of maturity that’ll really help the company,” Scales said.

The news comes at a time of increased consolidation in the agency space. AQuantive yesterday picked up SBI.Razorfish in a deal worth $160 million. Perhaps more than any other agency, Razorfish was a poster child for the enthusiasm, excess and wild experimentation that permeated agency culture and operations during the dot-com bubble. Ironically, that deal had aQuantive investing in Web site development — an arena that Scales said is “stabilized.”

Of the trend toward consolidation, Scales said, “I think the market dynamics are right. There’s been some pent up demand in the last couple years as the market has been soft. I think we’re coming out of that. People are betting their undervalued assets are going to be worth more.”

Scales added the company would not rule out further agency acquisitions: “We’re always looking.”