- Brian Morrissey

Hearst Corp. has reached an agreement to buy digital agency iCrossing, marking a decisive foray into the marketing services business for the publisher.

The acquisition nets the owner of newspapers like the San Francisco Chronicle and magazines including Cosmopolitan a 600-person digital shop with its roots in search marketing and optimization. In recent years, iCrossing has beefed up its capabilities in Web creative, analytics and social media.

"We see it bringing great value to our other lines of business," said Frank Bennack, CEO of Hearst. "They're all interested in expanding their capabilities on the Web and in search."

The privately held companies declined to reveal the purchase price. Earlier estimates pegged the acquisition at $375 million. ICrossing's management, including CEO Don Scales, will remain in place, the companies said. The transaction has yet to close.

Hearst said it would run iCrossing as an independent entity within a newly created marketing services unit led by Matthew Peterson, a veteran of Meredith, another publishing company that has diversified into digital marketing services. Meredith has acquired i-shops like Genex, New Media Strategies and Big Communications.

"ICrossing is much more than a search company," Peterson said. "It has a full suite of digital capabilities. We're interested in all of them."

Beyond expanding its revenue base by diversifying into higher-growth digital marketing, the question remains how owning a search-focused digital shop would benefit Hearst properties and vice versa. The answer: Hearst units can now offer advertisers a fuller suite of options, Bennack said.

From the iCrossing point of view, Hearst brings important relationships to the table, said Scales: "It will give us access to a number of clients we don't have access [to] today."

Bennack said Hearst would look to add other digital marketing companies, but would be "surefooted" in its approach.

The deal for iCrossing removes from the acquisition arena one of the last sizable independent digital agencies following the absorptions of Digitas and Razorfish by Publicis.

"We had a chance to talk to numerous people," said Scales. "We like the fact that it's an independent company and is built that way. We like being part of that."

See also: "David Kenny to Leave Publicis Groupe"