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Sapient's $50M Nitro Deal Goes Bad

Two years after it was acquired, Nitro loses Mars account, creative director

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Two years ago this month, Sapient, a Web design and digital infrastructure company, shelled out $50 million to buy Nitro, a traditional ad agency. Since then, though, little has been heard from SapientNitro’s more traditional half. And it’s not going to be a happy anniversary for the Nitro staffers left at the combined company. 

Earlier this year, Nitro founder Chris Clarke, an Australian entrepreneur and filmmaker who’d given the place the idiosyncratic atmosphere it had developed since he started it in Shanghai in 2002, left the company. Then last week, SapientNitro was rocked again, as it lost the last of its remaining Mars business—a Dove chocolate account that represented $30 million in U.S. ad spending. So there wasn’t much of Nitro left for Kathy Delaney, its creative head, who was hired by Clarke. No wonder, then, that she quit at the end of the week.

Chief marketing officer Bill Kanarick, a longtime Sapient executive, painted a much more optimistic picture of the company’s health. SapientNitro is growing at more than 30 percent annually, Kanarick says, and last year it added business from Target, Chrysler, American Airlines, Yahoo, and Johnson & Johnson, among others.

But Kanarick wouldn’t provide any breakdown of which half of the company is responsible for that new business. Nor would he offer any details about the percentage of revenue generated by each practice area. In fact, a knowledgeable source says that after the Mars’ Dove chocolate business leaves in September, Nitro will be down to ConAgra and Footlocker, both of which it had before it was acquired.

Pursuit of more traditional ad business may never have been in the original game plan. Kanarick says Sapient needed the branding chops of a traditional agency largely to position itself as a “next generation brand steward.” While Nitro’s brand credentials may have enhanced Sapient’s reputation in the marketplace, Nitro doesn’t seem to have gotten any benefit in return. 

“The Sapient people are brilliant, but there is a disconnect with Nitro; they are two cultures that never jelled,” says an industry observer close to the agency.

As recently as 2007, Nitro’s Clarke vowed to keep his agency independent and said he was about to make a digital acquisition to ensure that autonomy. Instead, in selling to a digital company with no branding experience, he set in place a scenario that sacrificed any future for Nitro. In the tension between the digital and traditional, it may be unrealistic to imagine ever achieving a perfect balance. Rather, the dominant culture wins, the lesser falls.