MODEM MEDIA: New-media pioneer loses footing

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modem media continues its drive to build the agency through acquisition and internal growth, while at the same time wooing new clients to replace AT&T Corp. (Last year AT&T consolidated its interactive business at Digitas, Boston, which also handles its direct business.)

Meanwhile, Modem has attracted a fleet of new clients, including Avon Products and Christie's Web site ( And it still works with General Electric Co. and J.C. Penney, clients from Modem's pioneering pre-Internet days more than a decade ago.

But the agency does feel the loss of AT&T, its biggest account. AT&T accounted for 20.7% of the company's revenue in 1998, the last full year Modem worked as i-agency of record before resigning last June.


Chairman-CEO G.M. O'Connell says: "It was clear our philosophies and strategies were not aligned with those of AT&T," but also insists the agency continues to move forward with new clients and initiatives.

"We're taking the approach that Web marketing needs to come from the perspective of what it enables the customer to do," he says. "All the great creative doesn't work -- if the e-business is unable to match the expectations of its pretty graphics."

For Delta Air Lines, Mr. O'Connell says Modem has "re-engineered their ability" to service and do business with their customers.

"Delta customers can manage their entire relationship via the Web, with e-mails, SkyMiles, the booking of flights, the checking of itineraries, checking arrivals, departures, cargo status. We've engineered the online business from the customer's perspective and the response has been tremendous," Mr. O'Connell says.

Modem positions itself as offering "Me-business," an approach based on delivering online marketing and infrastructure "from the mouse in," he says. "Our key thought is: How is this going to enable the customers to do more?"

Using that perspective, Modem overhauled the design and architecture of GE's corporate Web site.

Modem also won an assignment in February to develop online branding and Web development for General Motors Corp.'s interactive unit, e-GM. The agency went up against, Digitas and Proxicom, among others. Modem says the business is estimated at $30 million over three years.


"We won that business, we were told, because we were able to demonstrate that we understood how we can change the way the company does business, [and] that we could do it globally," says Mr. O'Connell.

Modem, which went public early last year and changed its name from the longer ModemMedia-PoppeTyson earlier this year, has been on an acquisition drive -- adding San Francisco-based Vivid early this year -- in addition to opening offices, including in Munich, Paris, Tokyo and Sao Paulo.

"We're growing like crazy, so the thing that we're doing now is to manage our growth without sacrificing quality," says Mr. O'Connell. "We're up to more than 800 people. We're selectively adding new global clients and gaining expertise in technology and engineering, the two real growth areas."

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