Thursday, April 05, 2007

Digitas Consolidates With MBC To Create Digitas Health

Digitas Consolidates With MBC To Create Digitas Health
by Gavin O'Malley, Thursday, Apr 5, 2007 6:00 AM ET
SCALING ITS HEALTH CARE BUSINESS, Digitas has combined its existing health care practice with the interactive agency it acquired last year, Medical Broadcasting Co.

Serving now as a stand-alone marketing agency, Digitas Health will be led by David Kramer, a co-founder of MBC, who as CEO of Digitas Health will report to Digitas President Laura Lang.

"This is bigger than a rebranding effort," said Lang. "You need expertise in this category because it's so complex, and MBC will bring that to all of our business."

Betting on the growth of health-related Web marketing, Digitas last year acquired Medical Broadcasting Co. for $30.4 million (with the possibility of additional payouts over the next three years, based on performance.)

"The health care marketing landscape is undergoing a shift in terms of how people ... interact with health information, placing emphasis on integrated and digital channels," said Lang.

The acquisition gave Digitas relationships with eight of the top 10 pharmaceutical companies--AstraZeneca, Bristol-Myers Squibb, and GlaxoSmithKline, among them--as ranked by worldwide health care revenue, according to Merrill Lynch. Prior to buying MBC, Digitas already counted Pfizer and Wyeth as clients.

The U.S. pharmaceutical and healthcare industry will spend $975 million on online advertising this year, according to eMarketer. That's up from $820 million last year, while eMarketer expects that number to rise to $1.19 billion next year.

MBC co-founder Linda Holliday told OnlineMediaDaily her company sought out Digitas because of clients' growing interest in online marketing.

"We see our clients taking online spends from 3 to 5 percent up to 20 to 30 percent over the next couple of years," said Holliday, adding: "We expect within the next five years that online will make up the majority of their spend."

Additionally, traffic to health-related Web sites continues to grow substantially. At Health, for example, page views were up an estimated 78% year-over-year in February, according to Nielsen//NetRatings.

In December, Publicis Groupe signed a $1.3 billion deal to acquire Digitas, the Boston-based online ad agency with sales of $565.5 million.

Digitas Health will be headquartered in Philadelphia, but will also operate across the Digitas network of offices, including New York, Chicago, and Boston.

buzz this