Christine Larson


Home About Me Writing Samples My Book For my Students		Forging Ahead: After a rough year, there are a number of agencies still standing. But these four are moving ahead By Christine Larson 4 February 2002 ADWEEK If there's one thing i-shops learned this year, it's that success is relative. In any year before 2001, no interactive agency with declining revenues, layoffs or significant client losses would ever make a list of successful agencies. But this year's a different story a lt ogether. With once high-flying agencies such as marchFirst now out of business, thousands of workers out of jobs, and online media spending down for the first time, many interactive agencies consider themselves lucky to still be standing at all. "It was a terrible year for advertising," summarizes Tom Hyland, partner and chairman of the new media group at PricewaterhouseCoopers in New York . Spending on online ads dropped to about $7.4 billion, down from $8.2 billion from 2000, he says. But some bright spots gleamed in the gloomy landscape, pointing the way for other struggling agencies. Smart agencies weathered the storm by putting their heads down and focusing on great creative; by finding new, more efficient ways of working; and above all, by delivering real resu lt s for their existing accounts, instead of dazzling would-be clients. Here are four very different agencies that all offered reason for hope. TRIBAL DDB: SURVIVORS In the decor of Tribal DDB's New York headquarters, Madison Avenue meets Silicon Alley, and for the moment, Madison Avenue seems to be winning. Much of the office design is gray and subdued, with a few notable concessions to the mu lt imedia vibe: Astroturf carpet in the conference room, polka-dot cushions on the minimalist furniture. In its performance over the last year, the agency's Madison Avenue heritage also came to the fore. "Blue-chip companies wanted to partner with agencies that they knew would be around tomorrow," says Matt Freeman, CEO of Tribal DDB North America, "There was a flight to stability." "Tribal is one of the real up-and-comers," says Jim Nail, senior analyst at Forrester Research. "Among the Madison Avenue crowd ... they demonstrate [a] commitment and willingness to think creatively and not be stuck in traditional marketing thinking or first-generation interactive thinking." To be sure, the company suffered its share of pain this year, laying off about 15 percent of its workforce. But throughout the downturn, the agency kept its bearings by emphasizing cutting-edge creative, according to Steven Marrs, president and COO. "We focus entirely on the work," he says. Last year, that creative focus resu lt ed in numerous awards, including the One Club Best of Show award for integrated campaigns, for the Anheuser-Busch "Whassup?" campaign. To complement the TV ad, the agency bui lt an application allowing users to create and send their own obnoxious greeting to friends. They also bui lt a site that translates the phrase into 26 languages. Viral campaigns such as "Whassup?" have helped the agency demonstrate an emerging model of advertising to its clients. "Traditionally, advertising has been bui lt on the model of intrusion. But with TiVo and technologies like it putting control in the hands of viewers, that model isn't so effective anymore," says Freeman. Instead, Tribal DDB is nudging its clients toward creating a "value exchange," offering music to music lovers, games to gamers. "The challenge is to wrap your brand around that experience without being too blatant, because this is a very sharp audience," says Marrs. Those experiences might include streaming the Britney Spears video that boosted traffic 46 percent on Pepsi.com or playing elaborate computer games such as Code Red, an online car race which launched the eponymous beverage last year. Regardless of the technology used, however, the agency's goal is to infuse online advertising with the same drama and emotion as traditional ads. A lt hough DDB Worldwide's windows across the street overlook the Tribal DDB offices, Freeman and Marrs say they don't feel like their corporate parent is breathing down their necks. The agency is accountable for its own profits and losses and Freeman says only about 50 percent of the company's revenue comes from DDB clients. Frequently, the agency works with other large branding firms--with BBDO on Pepsi and with Young & Rubicam on Sony, for instance. "We're integration agnostic," says Freeman. "People want to work together, and if you define roles, there's no struggle over P&L and that sort of thing," says Marrs. "You're never going to get rid of all the conflicts, but if you focus on getting customers for the client, you'll produce effective marketing." EXILE ON 7th: INSIDERS, NOT OUTCASTS In a year of massive consolidation, there's evidently still room for the maverick. In the past year, San Francisco-based Exile on 7th has scored some impressive wins through a combination of breakthrough creative work and savvy media planning. Among the laurels: the innovative Microsoft Windows XP launch; eBay consolidating its business at Exile; and new business from Sybase and the American Cancer Society. The company also purchased the media operations of advertising technology provider Me diaplex, acquiring the media planning and buying operations for Macys.com and other brand-name clients. Despite these achievements, Exile's president, Alan Burgis, is almost superstitiously humble. "Part of everyone's answer who had an OK year this year is, 'We got lucky,' "says Burgis. "We could have had clients who stopped spending last year." There's good reason for Burgis' cautious outlook. While Exile's new clients did keep spending, a few existing clients didn't survive the crash. One was sold, another filed Chapter 11. Revenues for 2001 dropped to $6.5 million from $8.5 million in 2000, and the agency had to lay off 25 people. Still, with many competitors no longer in business, it's a triumph to remain standing at all. "We set ourselves a mission of surviving and we did that," says Burgis. Unlike many first-generation interactive agencies, Exile on 7th has deep roots in the traditional advertising world. CEO Michael McMahon worked at Ammirati & Puns in New York and Anderson Lembke in San Francisco before founding an Exile forerunner, McMahon and Partners, in 1996. Later the agency became Left Field, then evolved into Exile in 1999. Burgis has worked at McCann-Erickson, FCB and Euro RSCG in Australia . True to their roots, McMahon and Burgis have continued to emphasize traditional advertising expertise, particularly in media. "We have media planners, media buyers and analysts. That's a huge difference" from other agencies, Burgis says. The division of labor allows each media specialist to build expertise in one area. As a direct resu lt of this staffing strategy, the agency can produce large media savings for clients, according to Burgis. "We can save 25 to 60 percent right off the bat," he says. "It's amazing how much money is left on the table by people who don't really understand media." The agency's focus on media savvy helped give wings to its ambitious "Yes You Can" campaign for the launch of Microsoft XP in October. The concept literally went outside the box--featuring flying figures that left the banner space and moved around on the page. The agency approached sites one by one, explained the concept and asked them to accommodate the ad. CNet, MSN, USAToday.com, Ask Jeeves and others agreed. "This was an interesting case study where the creative was used to create the media plan. We couldn't have done it if the media hadn't cooperated," says Burgis. A lt hough he can't release specific numbers, he says the campaign yielded a "double-digit increase in brand awareness, advertising awareness and likelihood to purchase." Because depth of experience is a key differentiating factor for Exile, the agency clung to its senior staff when downsizing. "We went out of our way to keep our most experienced people, which meant a greater number of layoffs. But the fact is we want to be best of breed, so we had to keep our best people," says Burgis. The agency now has about 30 employees. Another survival tactic the company adopted was to postpone plans to expand into other media. "We were looking to build an agency that did a lot more than online," says Burgis. But in December 2000, anticipating the downturn, "[we] decided rather than pursue the fully integrated shop, we would focus on one area." The company also eschewed costly creative shootouts. "We're happy to present our credentials, but we won't get involved in creative pitches. It's very expensive, it kills your people and we have too much respect for our team," Burgis says. CHEMISTRI: A POTENT MIX Chemistri, Leo Burnett's interactive subsidiary, enjoyed the best of both worlds last year. The Chicago-based i-shop reaped the advantages of big agency backing, sharing some 80 percent of its clients with Leo Burnett. At the same time, the 55-person shop stayed lean and nimble, allowing it to handle smaller projects with smaller budgets while still turning a profit. "Two years ago, everyone was growing so fast, it sometimes fe lt like we were too small, too lean," says Kurt Karlenzig, Chemstri's co-CEO. "But we fe lt our model would play out in the long term." Evidently it has. The agency's revenues increased to $10 million in 2001, up from $6 million in 2000. Clients included major packaged goods companies Kellogg Company and H.J. Heinz. And in a striking contrast to the rest of the industry, the agency didn't lay anyone off: In fact, they're still hiring. Chemistri grew out of Digital Garage, an interactive unit at Leo Burnett run by Karlenzig and his co-CEO Chris Miller. Reorganized and renamed in 2000, the unit scored its most visible win to date last year with the successful launch of GoArmy.com, the online component of the U.S. Army's "Army of One" recruiting campaign. The campaign as a whole clearly demonstrated the power of a large, mu lt ifaceted marketing entity. "The U.S. Army was a key success story for all of us," says Karlenzig, referring to the collaborative work of Chemistri, Leo Burnett and media buying firm Starcom IP. "It's not just an online story, but a complete, cross-media marketing story." The campaign launched in January 2001, featuring TV spots and Webisodes following several men and women through boot camp. The site, which featured rich media, chat rooms and information on some 200 Army jobs, drew two-and-a-half times the traffic of its predecessor and delivered more recruiting leads than any other media, including direct marketing, live events and direct TV. "The leads from the Web were the most qualified, which is not surprising, since they were the most informed," adds Karlenzig. The connection between the Army's TV efforts and Web site demonstrated a key industry trend of last year. "Both from the client side and the agency side, online is starting to be seen not just as a 'bo lt -on' to marketing campaigns. People are figuring out the relevant role for the Internet, finding a benefit to the consumer audience and tying that back to the brand," says Karlenzig. At the same time Chemistri demonstrated its ability to pull off sophisticated interactive projects within an ambitious soup-to-nuts campaign, they also embraced much smaller efforts. "Very few clients required complete end-to-end solutions of all of our teams. But we've always been able to take on small projects and put a lean team against them," says Karlenzig. The agency designed an interface for the Illinois Institute of Technology's Galvin Library this year and created a mini site for the Joffrey Ballet. The ability to take on small, as well as large, assignments, proved a key advantage this year. "It helped us survive a very tough financial year for a lot of people," says Karlenzig. "Even when large clients greatly reduced their budgets, it didn't put us at as much risk. If a significant six-figure budget dropped to half that amount, we were able to respond and still provide great quality service." MODEM MEDIA: TURNAROUND IN PROGRESS Marc Particelli just celebrated his one-year anniversary as CEO of Modem Me dia. And what a year it's been. "When I joined, I was convinced Modem Me dia was in a market space that would eventually recover. I never expected it to fall away the way it did," says Particelli. In his first year on the job, Particelli saw Modem's revenues drop from $134 million in 2000 to $100 million last year. He closed Modem's offices in New York , Japan and France and laid off 180 people worldwide, leaving the agency with about 600 employees. Still, thanks to Particelli's focus on efficiency and client relationships, things weren't nearly as bad as they could have been. In fact, the agency showed signs of a rebound from the difficu lt days that followed its 1999 loss of AT&T's business. Modem's 25 percent decrease in revenues last year bested the industry average of 30 to 40 percent declines. And the company's powerful lineup of clients, including GM, De lt a Airlines and Kraft, continued to grow. "Modem's on the comeback trail," says Forrester Research's Jim Nail. "A lot of the reasons I joined are the same reasons we survived," says Particelli. "When I looked at this business, I saw that Modem has an extraordinarily strong client list." The agency lost only two clients this year--JC Penney and Citibank. For many other clients, however, the work has plowed forward. Just a few weeks ago, Modem launched the GM Owner Center, an online resource for owners of GM vehicles. The site will be introduced in markets around the globe later this year. Me anwhile, the company has added Kodak and three "significant" clients in telecommunications, beverages and financial services (whose names can't be released due to client confidentiality constraints). Particelli is encouraged by the response of clients suffering budget cuts. "When their marketing budgets have been cut in half, they're not cutting their interactive budget in half. Interactive is receiving a higher share of the marketing dollars," he says. During the past year, Particelli has increased the agency's emphasis on efficient methods and procedures throughout the company, fostering shared knowledge and experience. That's not surprising, considering his consu lt ing background: Particelli was a senior partner at Booz Allen, then worked at Oak Hill Capital Partners, a private equity partnership, before joining Modem. "We've tried to integrate our functional skills more effectively and build practices--in technology, creative, project management, media and analysis. That's really helped us a lot in delivering more value for our clients," he says. Me anwhile, the company is focusing on bringing similar efficiencies to its clients, both at home and overseas, by creating unified global technology platforms. One project, for the consumer divisions of Philips, will allow local business managers across the Phillips network to market their products online while still adhering to a consistent brand experience. That kind of global unity can yield significant savings for clients, says Particelli. "We have some clients with hundreds of different sites around the world. There's a huge expense just in keeping track of that number of sites," he points out. Modem's international operations provided a bright spot in a dismal year, a lt hough the company shut down underperforming offices in Japan and France . "Our international business grew while domestic business declined," says Particelli. Being a public company in a year of plummeting stock prices hasn't made Particelli's job more difficu lt , he says. "Much to my surprise, our balance sheet became a competitive advantage," he says. Potential clients can reassure themselves of the company's solvency before making a commitment. "There have been too many situations where clients have engaged companies that don't exist six months later. When they look at us they can see we're financially sound." Christine Larson is a freelance writer living in Sacramento , Calif. She frequently writes about technology for IQ. ly.

Forging Ahead: After a rough year, there are a number of agencies still standing.
But these four are moving ahead

By Christine Larson

4 February 2002
ADWEEK

If there's one thing i-shops learned this year, it's that success is relative. In any year before 2001, no interactive agency with declining revenues, layoffs or significant client losses would ever make a list of successful agencies. But this year's a different story a lt ogether. With once high-flying agencies such as marchFirst now out of business, thousands of workers out of jobs, and online media spending down for the first time, many interactive agencies consider themselves lucky to still be standing at all.

"It was a terrible year for advertising," summarizes Tom Hyland, partner and chairman of the new media group at PricewaterhouseCoopers in New York . Spending on online ads dropped to about $7.4 billion, down from $8.2 billion from 2000, he says.

But some bright spots gleamed in the gloomy landscape, pointing the way for other struggling agencies. Smart agencies weathered the storm by putting their heads down and focusing on great creative; by finding new, more efficient ways of working; and above all, by delivering real resu lt s for their existing accounts, instead of dazzling would-be clients. Here are four very different agencies that all offered reason for hope.

TRIBAL DDB: SURVIVORS

In the decor of Tribal DDB's New York headquarters, Madison Avenue meets Silicon Alley, and for the moment, Madison Avenue seems to be winning. Much of the office design is gray and subdued, with a few notable concessions to the mu lt imedia vibe: Astroturf carpet in the conference room, polka-dot cushions on the minimalist furniture.

In its performance over the last year, the agency's Madison Avenue heritage also came to the fore. "Blue-chip companies wanted to partner with agencies that they knew would be around tomorrow," says Matt Freeman, CEO of Tribal DDB North America, "There was a flight to stability."

"Tribal is one of the real up-and-comers," says Jim Nail, senior analyst at Forrester Research. "Among the Madison Avenue crowd ... they demonstrate [a] commitment and willingness to think creatively and not be stuck in traditional marketing thinking or first-generation interactive thinking."

To be sure, the company suffered its share of pain this year, laying off about 15 percent of its workforce. But throughout the downturn, the agency kept its bearings by emphasizing cutting-edge creative, according to Steven Marrs, president and COO. "We focus entirely on the work," he says.

Last year, that creative focus resu lt ed in numerous awards, including the One Club Best of Show award for integrated campaigns, for the Anheuser-Busch "Whassup?" campaign. To complement the TV ad, the agency bui lt an application allowing users to create and send their own obnoxious greeting to friends. They also bui lt a site that translates the phrase into 26 languages.

Viral campaigns such as "Whassup?" have helped the agency demonstrate an emerging model of advertising to its clients. "Traditionally, advertising has been bui lt on the model of intrusion. But with TiVo and technologies like it putting control in the hands of viewers, that model isn't so effective anymore," says Freeman. Instead, Tribal DDB is nudging its clients toward creating a "value exchange," offering music to music lovers, games to gamers. "The challenge is to wrap your brand around that experience without being too blatant, because this is a very sharp audience," says Marrs.

Those experiences might include streaming the Britney Spears video that boosted traffic 46 percent on Pepsi.com or playing elaborate computer games such as Code Red, an online car race which launched the eponymous beverage last year. Regardless of the technology used, however, the agency's goal is to infuse online advertising with the same drama and emotion as traditional ads.

A lt hough DDB Worldwide's windows across the street overlook the Tribal DDB offices, Freeman and Marrs say they don't feel like their corporate parent is breathing down their necks. The agency is accountable for its own profits and losses and Freeman says only about 50 percent of the company's revenue comes from DDB clients. Frequently, the agency works with other large branding firms--with BBDO on Pepsi and with Young & Rubicam on Sony, for instance.

"We're integration agnostic," says Freeman.

"People want to work together, and if you define roles, there's no struggle over P&L and that sort of thing," says Marrs. "You're never going to get rid of all the conflicts, but if you focus on getting customers for the client, you'll produce effective marketing."

EXILE ON 7th: INSIDERS, NOT OUTCASTS

In a year of massive consolidation, there's evidently still room for the maverick.

In the past year, San Francisco-based Exile on 7th has scored some impressive wins through a combination of breakthrough creative work and savvy media planning. Among the laurels: the innovative Microsoft Windows XP launch; eBay consolidating its business at Exile; and new business from Sybase and the American Cancer Society. The company also purchased the media operations of advertising technology provider Me diaplex, acquiring the media planning and buying operations for Macys.com and other brand-name clients.

Despite these achievements, Exile's president, Alan Burgis, is almost superstitiously humble. "Part of everyone's answer who had an OK year this year is, 'We got lucky,' "says Burgis. "We could have had clients who stopped spending last year."

There's good reason for Burgis' cautious outlook. While Exile's new clients did keep spending, a few existing clients didn't survive the crash. One was sold, another filed Chapter 11. Revenues for 2001 dropped to $6.5 million from $8.5 million in 2000, and the agency had to lay off 25 people. Still, with many competitors no longer in business, it's a triumph to remain standing at all.

"We set ourselves a mission of surviving and we did that," says Burgis.

Unlike many first-generation interactive agencies, Exile on 7th has deep roots in the traditional advertising world. CEO Michael McMahon worked at Ammirati & Puns in New York and Anderson Lembke in San Francisco before founding an Exile forerunner, McMahon and Partners, in 1996. Later the agency became Left Field, then evolved into Exile in 1999. Burgis has worked at McCann-Erickson, FCB and Euro RSCG in Australia .

True to their roots, McMahon and Burgis have continued to emphasize traditional advertising expertise, particularly in media.

"We have media planners, media buyers and analysts. That's a huge difference" from other agencies, Burgis says.

The division of labor allows each media specialist to build expertise in one area. As a direct resu lt of this staffing strategy, the agency can produce large media savings for clients, according to Burgis. "We can save 25 to 60 percent right off the bat," he says. "It's amazing how much money is left on the table by people who don't really understand media."

The agency's focus on media savvy helped give wings to its ambitious "Yes You Can" campaign for the launch of Microsoft XP in October. The concept literally went outside the box--featuring flying figures that left the banner space and moved around on the page. The agency approached sites one by one, explained the concept and asked them to accommodate the ad. CNet, MSN, USAToday.com, Ask Jeeves and others agreed.

"This was an interesting case study where the creative was used to create the media plan. We couldn't have done it if the media hadn't cooperated," says Burgis.

A lt hough he can't release specific numbers, he says the campaign yielded a "double-digit increase in brand awareness, advertising awareness and likelihood to purchase."

Because depth of experience is a key differentiating factor for Exile, the agency clung to its senior staff when downsizing. "We went out of our way to keep our most experienced people, which meant a greater number of layoffs. But the fact is we want to be best of breed, so we had to keep our best people," says Burgis. The agency now has about 30 employees.

Another survival tactic the company adopted was to postpone plans to expand into other media. "We were looking to build an agency that did a lot more than online," says Burgis. But in December 2000, anticipating the downturn, "[we] decided rather than pursue the fully integrated shop, we would focus on one area."

The company also eschewed costly creative shootouts. "We're happy to present our credentials, but we won't get involved in creative pitches. It's very expensive, it kills your people and we have too much respect for our team," Burgis says.

CHEMISTRI: A POTENT MIX

Chemistri, Leo Burnett's interactive subsidiary, enjoyed the best of both worlds last year. The Chicago-based i-shop reaped the advantages of big agency backing, sharing some 80 percent of its clients with Leo Burnett. At the same time, the 55-person shop stayed lean and nimble, allowing it to handle smaller projects with smaller budgets while still turning a profit.

"Two years ago, everyone was growing so fast, it sometimes fe lt like we were too small, too lean," says Kurt Karlenzig, Chemstri's co-CEO. "But we fe lt our model would play out in the long term."

Evidently it has. The agency's revenues increased to $10 million in 2001, up from $6 million in 2000. Clients included major packaged goods companies Kellogg Company and H.J. Heinz. And in a striking contrast to the rest of the industry, the agency didn't lay anyone off: In fact, they're still hiring.

Chemistri grew out of Digital Garage, an interactive unit at Leo Burnett run by Karlenzig and his co-CEO Chris Miller. Reorganized and renamed in 2000, the unit scored its most visible win to date last year with the successful launch of GoArmy.com, the online component of the U.S. Army's "Army of One" recruiting campaign.

The campaign as a whole clearly demonstrated the power of a large, mu lt ifaceted marketing entity. "The U.S. Army was a key success story for all of us," says Karlenzig, referring to the collaborative work of Chemistri, Leo Burnett and media buying firm Starcom IP. "It's not just an online story, but a complete, cross-media marketing story."

The campaign launched in January 2001, featuring TV spots and Webisodes following several men and women through boot camp. The site, which featured rich media, chat rooms and information on some 200 Army jobs, drew two-and-a-half times the traffic of its predecessor and delivered more recruiting leads than any other media, including direct marketing, live events and direct TV. "The leads from the Web were the most qualified, which is not surprising, since they were the most informed," adds Karlenzig.

The connection between the Army's TV efforts and Web site demonstrated a key industry trend of last year. "Both from the client side and the agency side, online is starting to be seen not just as a 'bo lt -on' to marketing campaigns. People are figuring out the relevant role for the Internet, finding a benefit to the consumer audience and tying that back to the brand," says Karlenzig.

At the same time Chemistri demonstrated its ability to pull off sophisticated interactive projects within an ambitious soup-to-nuts campaign, they also embraced much smaller efforts.

"Very few clients required complete end-to-end solutions of all of our teams. But we've always been able to take on small projects and put a lean team against them," says Karlenzig. The agency designed an interface for the Illinois Institute of Technology's Galvin Library this year and created a mini site for the Joffrey Ballet.

The ability to take on small, as well as large, assignments, proved a key advantage this year. "It helped us survive a very tough financial year for a lot of people," says Karlenzig. "Even when large clients greatly reduced their budgets, it didn't put us at as much risk. If a significant six-figure budget dropped to half that amount, we were able to respond and still provide great quality service."

MODEM MEDIA: TURNAROUND IN PROGRESS

Marc Particelli just celebrated his one-year anniversary as CEO of Modem Me dia. And what a year it's been.

"When I joined, I was convinced Modem Me dia was in a market space that would eventually recover. I never expected it to fall away the way it did," says Particelli.

In his first year on the job, Particelli saw Modem's revenues drop from $134 million in 2000 to $100 million last year. He closed Modem's offices in New York , Japan and France and laid off 180 people worldwide, leaving the agency with about 600 employees.

Still, thanks to Particelli's focus on efficiency and client relationships, things weren't nearly as bad as they could have been. In fact, the agency showed signs of a rebound from the difficu lt days that followed its 1999 loss of AT&T's business. Modem's 25 percent decrease in revenues last year bested the industry average of 30 to 40 percent declines. And the company's powerful lineup of clients, including GM, De lt a Airlines and Kraft, continued to grow.

"Modem's on the comeback trail," says Forrester Research's Jim Nail.

"A lot of the reasons I joined are the same reasons we survived," says Particelli. "When I looked at this business, I saw that Modem has an extraordinarily strong client list." The agency lost only two clients this year--JC Penney and Citibank.

For many other clients, however, the work has plowed forward. Just a few weeks ago, Modem launched the GM Owner Center, an online resource for owners of GM vehicles. The site will be introduced in markets around the globe later this year. Me anwhile, the company has added Kodak and three "significant" clients in telecommunications, beverages and financial services (whose names can't be released due to client confidentiality constraints).

Particelli is encouraged by the response of clients suffering budget cuts. "When their marketing budgets have been cut in half, they're not cutting their interactive budget in half. Interactive is receiving a higher share of the marketing dollars," he says.

During the past year, Particelli has increased the agency's emphasis on efficient methods and procedures throughout the company, fostering shared knowledge and experience. That's not surprising, considering his consu lt ing background: Particelli was a senior partner at Booz Allen, then worked at Oak Hill Capital Partners, a private equity partnership, before joining Modem.

"We've tried to integrate our functional skills more effectively and build practices--in technology, creative, project management, media and analysis. That's really helped us a lot in delivering more value for our clients," he says.

Me anwhile, the company is focusing on bringing similar efficiencies to its clients, both at home and overseas, by creating unified global technology platforms. One project, for the consumer divisions of Philips, will allow local business managers across the Phillips network to market their products online while still adhering to a consistent brand experience. That kind of global unity can yield significant savings for clients, says Particelli.

"We have some clients with hundreds of different sites around the world. There's a huge expense just in keeping track of that number of sites," he points out.

Modem's international operations provided a bright spot in a dismal year, a lt hough the company shut down underperforming offices in Japan and France . "Our international business grew while domestic business declined," says Particelli.

Being a public company in a year of plummeting stock prices hasn't made Particelli's job more difficu lt , he says. "Much to my surprise, our balance sheet became a competitive advantage," he says. Potential clients can reassure themselves of the company's solvency before making a commitment. "There have been too many situations where clients have engaged companies that don't exist six months later. When they look at us they can see we're financially sound."

Christine Larson is a freelance writer living in Sacramento , Calif. She frequently writes about technology for IQ.

ly.