Considering the past few months' flurry of interactive agency moves and buys on the West Coast, it looks like an Internet gold rush has hit the industry. Benefits ranging from the talent pool to the high-tech industry in Silicon Valley and even the weather are drawing East Coasters and others westward.
Last week, Grey Interactive's stand-alone Kaufman Patricof Enterprises, New York, announced it would open an office in Los Angeles. Two weeks ago, Agency.com, New York, bought Ketchum Interactive, San Francisco; and US Web, Santa Clara, Calif., bought Ikonic, San Francisco. US Web also consolidated its three Los Angeles offices into one 100-person shop.
Earlier this year, Magnet Interactive, Washington, D.C., and Rare Medium, New York, both said they would open Los Angeles offices. Last year, iXL, Atlanta, bought BoxTop Interactive, Los Angeles, and SIG, Boston, opened a San Francisco office.
A NEED FOR TECHNICAL TALENT
The West Coast, once seen as too technology and entertainment heavy, seems to have captured the fancy of growing agencies.
"The West Coast makes sense to people, especially for those on the East Coast," said Dana Tower, analyst with Forrester Research. "They need technical talent and technical clients and that is a natural for the West Coast."
He also said technical clients can make a difference in showing a strong balance sheet. "Silicon Valley is where the technology credibility is for this country. So it's a credibility builder too."
Glenn Meyers, president-CEO of the growing Rare Medium, said clients, talent and opportunity are the reasons his company is expanding to the West. The company was recently bought by ICC Technologies, Hatboro, Pa., in a deal that lets Rare Medium retain its name and staff.
"It seems like there's a window of opportunity to get out there and land some clients," he said. "Silicon Valley has got a huge advantage on technology, but everyone there is looking for the killer application on the Web. Front end creative is just not as important."
Agency.com Chairman-CEO Chan Suh said his agency had been looking for a West Coast partner for 18 months before finding the 11-person Ketchum shop in San Francisco, now called Agency.com. Omnicom Group is the parent of Ketchum and a 20% owner of Agency.com.
"We have clients with significant presence on the West Coast" such as Hewlett-Packard Co. and Metropolitan Life Insurance Co., Mr. Suh said. "We wanted to make sure we had someone there who can get up and go to a meeting--not just a sales office."
A GEOGRAPHIC ADVANTAGE
Agency.com gains Ketchum clients including Intel Corp., Netscape Communications Corp. and Pacific Bell.
Toby Corey, president and chief operating officer of US Web, which has acquired nearly 40 companies in the last year, said the West Coast is better positioned to serve corporate America with the Internet savvy agencies and prominent Web companies located there.
"The West Coast clearly has an advantage as being the geographic region with an early lead," Mr. Corey said.
Still, analysts and industry insiders point out that the convergence, while hot in the West, is happening everywhere. "Agencies are building out their networks," Mr. Tower said.
And it seems even more geographic expansion is ahead for most agencies. The West Coast is important, but not critical. What's more important is having some global reach as next year comes along. "Firms that don't will be struggling to fully serve their clients," Mr. Tower said.
Copyright May 1998, Crain Communications Inc.