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Avenue A adds interactive agency

The Internet marketing company says it will buy rival i-Frontier for an undisclosed sum, a sign of further consolidation in the flagging online-advertising industry.

Avenue A, an Internet-marketing services company, said Tuesday that it will acquire rival i-Frontier for an undisclosed sum, a sign of further consolidation in the flagging online advertising industry.

Under terms of the deal, i-Frontier will operate as a wholly owned subsidiary of Seattle-based Avenue A, maintaining its brand name and offices in Philadelphia. The 6-year-old company, which employs 58, designs and places online advertisements for clients including AT&T. Avenue A, which maintains a staff of 200 in New York and Seattle, plans and buys online media, and sells the technology to deliver and analyze the effects of ad campaigns. Its clients include Microsoft and Walt Disney.

"The combination of i-Frontier's and Avenue A's strong client portfolios will make us an even more potent force in the digital-marketing industry," Avenue A CEO Brian McAndrews said in a statement.

The merger is only the latest move in a vastly shifting industry. During the late '90s and into 2000, the number of companies providing Internet advertising services and technology grew exponentially. But with the economic downturn, severe budget cutbacks and the closure of several dot-coms, many such companies were forced out of business. Others sold business units or merged with other companies to stay afloat. For example, in recent weeks, former highflier Engage sold off its online advertising assets.

Avenue A has weathered the storm, but not without losses. For the third quarter, ending Sept. 30, Avenue A reported a net loss of $678,000 on total revenue of about $34 million, compared with a net loss of $6.6 million on sales of $20.4 million for the third quarter of 2001.

i-Frontier, a privately held company, had estimated revenue of $5.4 million in 2001, down roughly 27 percent from sales of $7.4 million in 2000, according to industry figures from Ad Age. (The trade publication ranked i-Frontier in its annual list of the top 100 interactive agencies.) The agency expects to exceed $7 million in revenue for 2002.

McAndrews said that the acquisition is expected to be immediately accretive to earnings. i-Frontier will retain its management team, under leadership of its founder and president, Brad Aronson.