Tightening Up: CoActive tries more unified front after down year.

After a lackluster year for gross sales and profits, CoActive Marketing Group is putting into place an integration plan first announced last fall (January promo) and designed to grow the company over the next two years.

The first step is to rebrand operating divisions Optimum Group and Inmark Services as CoActive, a name first adopted last fall by the holding company that owns the two agencies. Step Two is a growth initiative to increase the current 2,000-member staff (including part-timers) by 15 percent over two years, and to turn Internet marketing unit CoActivity.com into a $4 million operation by 2001.

Adopting the CoActive moniker “really means that we’re bringing our act together,” says group president Mike Halloran, the former Optimum head who will now oversee all strategic marketing, promotions, advertising, and creative, as well as CoActivity.com, from the company’s Cincinnati office. “As we sell our integrated marketing approach, it was clumsy to try to sell it under different names.”

The company’s other primary division, event marketer US Concepts, New York City, will retain its name. “US Concepts is a pretty well-branded entity,” says CoActive ceo John Benfield.

Also retaining its name is San Antonio-based Market Vision, an ethnic marketing shop run by Coca-Cola veteran Bonnie Garcia. CoActive has been working with the agency for more than a year, and this spring purchased “just shy of a majority stake” in the operation, says Benfield.

ATTACK PLANS

Hitting its staffing goals shouldn’t be a problem, since the company has seen a 20-percent rise over the past year, says Halloran. Getting more of a revenue return from Coactivity.com (a unit that originated at Optimum) also shouldn’t be difficult, since the division is already driving business for the company as a whole. “It gets us in to talk to clients initially,” he says.

Turning the various CoActive operations into a cohesive force could be more difficult. The combined company posted a five-percent increase in sales to $38.8 million in fiscal 2000, ended March 31, despite a full-year’s worth of results from US Concepts. Gross profit slipped to $11.4 million, down from $12.5 million in fiscal ’99 and a far cry from the growth it forecast on its entry for the promo 100 (June promo).

Acquiring Optimum (in March ’98 for $15.7 million in cash and stock) and U.S. Concepts (in December ’98 for $1.7 million, with performance options of up to $2.5 million more) has affected the company’s bottom line. Coactive posted a net loss of $874,000 in fiscal 2000 and began the new year with negative working capital of $1.7 million.

“We had some downturns here and there with a few key accounts,” says Halloran. Better aligning the divisions to position CoActive as an integrated agency for trade and consumer promotions should return CoActive to profitability this year, Benfield says.