Special Report: Icon builds global stable of Web shops

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Icon Medialab is following the lead of its minority stakeholder, the behemoth Interpublic Group of Cos., and feverishly building a sizable and substantial global network of digital agencies.

In November, Icon Medialab, based in Stockholm and Brussels, snapped up New York-based Nicholson NY for an estimated $76 million in stock, giving it an instant U.S. presence with name-brand recognition. In March, the publicly traded Internet consultancy set up Icon Medialab Asia, poised with $70 million in capital to establish offices in 10 markets by yearend 2001.

NEXT UP: ASIAN EXPLOSION

With an established European network and offices in San Francisco and New York, moving to Asia is a logical step.

"Asia is the next market in line for an explosion of growth," says Tom Nicholson, New York-based global chief creative officer.

"The year 2000 is really the year of global business," he says. "People have traditionally, and by traditionally I mean the last 12 months, not paid much attention to the global aspect. We saw it coming by talking with our clients."

In 1999, Icon revenue reached $72 million. About half of the growth was organic and half was from acquisition, Mr. Nicholson said. Interpublic took a 19.9% stake in Icon in March 1999 via a $20 million investment.

U.S. ACQUISITIONS PLANNED

Icon's purchase of highly creative, award-winning Nicholson was a major move into the U.S., but won't be the last. Clients include IBM Corp., Motorola, Pfizer and New York's Metropolitan Museum of Art.

"We're also looking for more growth in U.S. We're looking at key markets, partially geographically, but also culturally as well," Mr. Nicholson says.

Because of the market's enormity, organic growth in the U.S. is not an option for foreign-based agencies, he says.

"You have to go into the U.S. in an acquisition," he says. "The U.S. market is different from the rest of the world. In the U.S., you have a large homogeneous market. In Europe, it's small-scale markets. When you go into Spain and there is relatively low penetration, you have a different audience and attitude."

Creative hasn't suffered from growing pains.

In April, Icon Medialab walked away from the International Web Page Awards with five creative excellence honors for sites such as gifts.com, Volkswagen and the Metropolitan Museum of Art.

GLOBAL ROLLOUT

The Met's site has met commercial and critical success. "The museum is a very large commerce initiative, with a solid business in bricks and mortar. But they've seen incredible results since the new site's launch, with sales increasing 600% and membership skyrocketing as well," Mr. Nicholson says. "They have a very strong focus on quality. It's a sacred brand."

Other clients include General Motors Corp., L'Oreal and Sony Corp.

Various offices of Icon Medialab's global network have pitched in for Volkswagen's site, a client since 1996. One major step was a site for VW in Sweden, allowing consumers to customize and order their cars online, one of the first European automakers to do that.

Icon Medialab helped construct LetsBuyIt.com, one of Europe's leading Web sites. The group-buying site, launched in April 1999 in Sweden, lets consumers consolidate their purchasing power to buy items at lower prices.

Now in Denmark, England, Finland, Germany and Norway, LetsBuyIt plans to move into the U.S. by yearend. "It's like Amazon.com here in terms of recognition," Mr. Nicholson says.

Just as Icon Medialab advises clients to first set up a model, apply it to one country, then roll it out globally, the agency is following its own advice.

Nicholson NY was set up like a conglomeration of entrepreneurial businesses. It remains as a group of set teams, each run like an individual small business responsible for its own profit-and-loss statements.

"Clients are introduced to the team, and the team is already up to speed and can hit the ground running. Quality is better and they can work in a faster time frame," Mr. Nicholson says.

Mr. Nicholson, as chief creative officer, plans to bring the New York model around the world with Icon.

TEAM EFFORT

"When you trust the team to manage their own [profit and loss], they become responsible for their own profitability and get a sense of empowerment. They don't have to take a client just because it is good for the company, which is what drives people out of companies. This also allows them to decide how many people they want on their team based on what you are willing to spend."

Copyright June 2000, Crain Communications Inc.

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