Nuforia to Buy Red Sky Interactive

SAN FRANCISCO (03/28/2000) - Nuforia, an interactive marketing company, said today that it plans to acquire online marketing shop Red Sky Interactive in a private deal.

The purchase will give the New York firm a creative team, complementing its technology strength amid an industry consolidation that is forcing smaller agencies to either participate or risk losing out on business.

Although Nuforia did not disclose terms of the deal, the company said that Omnicom, the world's largest advertising holding company - and a minority investor in both Nuforia and Red Sky - would own at least 20 percent of the combined firm, which will take the name Red Sky Interactive. Omnicom CEO John Wren introduced executives of the respective companies to each other in December after his company invested in Nuforia, according to Nuforia President Howard Belk.

Belk says that while Wren suggested they might work well together, he did not pressure the companies to make a deal. The acquisition would give each outfit additional offices and functional strengths to compete for business they might otherwise turn away in an increasingly competitive sector. Nuforia touts its ability to do the technological work that powers online campaigns; it sells itself to clients as an online brand consultant. Red Sky emphasizes its design work with video and sound on interactive ad campaigns. Red Sky will help Nuforia round out its branding work and will help position the new company for the onset of broadband, Belk says.

"I don't think companies have figured out how to approach our engagements and how to bring this entertainment perspective to it," Belk says. "It helps differentiate us from the competition." Omnicom has taken minority investments in 19 other interactive marketing firms, and has formed a unit called Communicade to manage its Internet investments.

Three of those investments - USWeb-CKS, and Razorfish - have gone public. USWeb-CKS was recently acquired by Whittman-Hart, and the merged company was renamed MarchFirst last week. Belk says that his company has no definitive plans to go public, but that it is definitely looking at that tactic as one of many to expand its business.

"We have to keep up our momentum and keep up with the big companies out there, and you need capital to do that, so it's something you talk about," he says.

"It's an attractive source of capital for sure." Nuforia and Red Sky have both worked on strategy, technology and creative aspects for prominent clients.

Based in San Francisco, Red Sky has developed interactive campaigns for Miller beer, Absolut, Levi Strauss and Nike, among others. New York-based Nuforia has worked for Altoids breath mints, Anheuser-Busch, Kraft Foods and Nickelodeon, in addition to a number of financial industry clients.

Omnicom currently owns an 18.5 percent stake in Nuforia and a 40 percent stake in Red Sky.

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