Special Report: Interactive agency heeds London's call

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For Dennis Interactive, international expansion is a leap of faith worth taking. The New York-based digital strategy, creative and media buying agency went across the pond on Oct. 11 to open an office in London. Dennis Interactive's business development team established the European beachhead and took deliberate steps to man the office with local talent, support the office with a key international partnership and contain costs through corporate governance.

A 55-person-strong company, with about $5.2 million in annual revenue, Dennis Interactive didn't take the decision to go international lightly.

In fact, the agency had worked with foreign clients in the past without a home office or even a single business trip. It had spearheaded the advertising for the launch of Israel-based software developer Impressia and Turkey-based movie company Golden Horn by transmitting documents over a secure intranet.

Why, then, did it set up shop in London?

"We think we can have profitable jobs out of London,'' said Tom Livaccari, Dennis Interactive's VP-business development. "We're looking to see whether we can have sales offices and account managers in local markets, while producing the work in the United States.''

London is the logical first step for Dennis Interactive because it does have a large client in the market, The National Magazine Co., which ranks as a long-term opportunity. Dennis Interactive built the magazine distributor's corporate Web site more than a year ago, and is now working on an ever-expanding array of marketing projects for the client. Though National Magazine did not require Dennis Interactive to set up an office in its backyard, the new office was a bonus for the big client, Livaccari said.

The driving force behind the London office is that it will help Dennis Interactive compete for accounts across all of Europe, so steps have been taken to prepare it for competition against companies from other countries.

Dennis Interactive has partnered with localization service provider Europoints. That company will take Dennis Interactive's sales materials and client work and translate it into such languages as French, Spanish, German, Swedish, Norwegian and Portuguese. Moreover, the company scans all of Dennis Interactive's communications to make sure the company is aligned with the nuances of local cultures, Livaccari said.

Taxes were a huge issue for Dennis Interactive. While the sales tax for Dennis Interactive in New York is 8.25%, value-added taxes in London are 17.5%. Dennis Interactive wanted to ensure that its U.S. employees weren't subject to those taxes when they traveled to the London office for business, visited with international clients or attended European trade shows. It set up a separate London-based company to house its European operations, but kept its travelling U.S. executives assigned to the home office. The savings are a "huge advantage for us,'' Livaccari said. Instead of broadly advertising the launch of its London office-many Internet start-ups trumpet the arrival of an international office in U.S. financial publications because of the cachet they may bring-Dennis Interactive limited its campaign to full-page ads in the European edition of The Industry Standard and Revolution, Livaccari said. It also plans to limit its trade show participation to European events, including Internet World London and Jupiter Consumer Online. In staffing the office, the agency sought local talent. The move avoided the feeling of an American company coming in with Americans to dominate local clients, and also held costs down because local salaries are somewhat lower than in the U.S. and health-care costs are nonexistent for residents of the socialized U.K., Livaccari said. With London up and running, Dennis Interactive is far from done on the global scene. It is eyeing Barcelona and Israel as prime candidates for its next foreign ventures, Livaccari said.

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