Omnicom Deconstructs Agency.com

The holding company is spinning off Agency.com San Francisco as a new entity: Signal to Noise. Agency.com Chicago will be folded into an office of E-Graphics Worldwide, TBWA’s global production services arm, to form a specialized shop focused on Web development and search marketing. Agency.com New York, the third domestic office, is already integrated with TBWA\Chiat\Day New York.

Agency.com’s international offices will also become part of TBWA offices over time, according to sources. Agency.com still exists in London, Italy and Brussels, but the name will disappear once staffers are integrated into TBWA, according to a source. Previously, Agency.com’s operation in China merged into TBWA.

The effect of the reorganization means the Agency.com brand will cease to exist in the United States but remain in Europe, for now. TBWA had no immediate comment.

There could be further reorganization of Agency.com assets. TBWA’s E-Graphics, meanwhile, could merge with sister shop BBDO’s Hub+ to create a larger Omnicom Group player that can service clients from multiple agencies, said sources. Both units are global, but the four-year-old E-Graphics is run out of Los Angeles and Hub+, which also launched in 2006, is based in London. Such a combination could emerge this summer.

The move comes after Agency.com suffered a disastrous four-year run of management changes, client defections and uncertainty of its direction as part of TBWA but still operating independently. In 2006, Agency.com released a viral video it produced as part of a pitch for Subway’s interactive business. The video ignited a firestorm of criticism across the industry as an amateurish move. Agency.com founder Chan Suh came back as CEO in 2007 following the short, tumultuous tenure of David Eastman, who himself replaced Don Scales in a messy corporate spat.

Suh sought to stabilize Agency.com. In the meantime, Agency.com bled clients and staff. It filed suit against Scales in 2008, accusing him of violating his contract by poaching employees to his new post at iCrossing. The suit was subsequently settled. Meanwhile, Agency.com suffered from cutbacks in client spending and struggled to find a role in its alignment with the TBWA network. In a controversial move, in 2009 it recast the site for client Skittles as an open feed from social networks, opening the site to unfiltered, often profane comments from Twitter. Suh departed as CEO earlier this year.

Agency.com was one of the original crop of Internet shops to spring up with the advent of the Web. Founded in 1995, it joined Organic and Razorfish as early leaders in the space. Agency.com went public in 1999 before suffering significant setbacks in the dot-com crash. Omnicom, which was a minority investor in Agency.com, bought the shop back in a transaction culminated in 2003.

Agency.com’s San Francisco outpost, led by president Jordan Warren and executive creative director Scott Briskman, was a bright spot during the last few bleak years for the network. Its clients include eBay, Nike, Ask and Apple. The 45-person office will operate as an integrated marketing company, with Warren reporting up through TBWA.

Warren said the spin-off means the shop can continue to execute on its vision of idea-led creative backed by data, only without the baggage that came from being part of an agency with a .com in its name.

“What we’ve been doing has been different,” Warren said. “It’s a chance to show what we’ve been doing to a broader audience.”

While Signal to Noise will report through TBWA, it will operate separately, according to Warren, building its vision of digital-centric integrated marketing. Of its major clients, only Apple is shared with TBWA’s Media Arts Lab.

“We’ll work with TBWA when it makes sense, but we’ll also work with other agencies,” Warren said.