How to Kill an Ad Agency in 2 Easy Steps

Agency.com -- the online ad agency whose name screamed "mid-1990s!", when everyone thought a successful business should have the ".com" suffix -- is dead. Don't mourn. Learn. Parent company Omnicom (OMC) killed Agency.com even though it still apparently had about 500 employees. The shop's history is a good case study: It teaches you that mindlessly chasing trends coupled with constant management churn can be disastrous for a business.

Here's a brief, selective history of Agency.com, illustrating the above:

It was founded in 1995 by Chan Suh and went public on NASDAQ as ACOM in 1999, like a lot of trendy dot-com businesses.

From 2001 through 2003, its shares were acquired by Omnicom and wrapped into the holding company's digital unit. But the dot-com bust of the same period took its toll, and Agency.com lost a lot of business and laid off hundreds of staff.

So Omnicom tried another strategy that was trendy in the mid-2000s (think Enron): It moved Agency.com and its other digital agencies into an off-balance sheet entity. When investors found out, they tanked OMC's stock in revenge. They also sued Omnicom. Although investors lost that suit, it was a reminder that shareholders generally dislike it when companies attempt to move non-performing assets off their books and then buy back the bits they still like.

In 2006, Agency.com chased another trend by pitching the Subway sandwich chain's ad account with a "viral" video -- without Subway's permission -- of agency staffers preparing their pitch. Viral videos were all the rage at the time. But the movie, which featured various Agency.com staffers urgently walking around their offices and brainstorming in conference rooms -- was met with gales of laughter by the business. To this day, it has garnered just 13,615 views on YouTube.

The same year, CEO Donald Scales left Agency.com and went to iCrossing, taking a bunch of staffers with him. That resulted in a lawsuit. In 2007, new CEO David Eastman left after less than a year at the helm and founder Chan Suh, who had left the company during one of its previous entities, was named CEO again. In 2008, Adweek reported that Agency.com was stabilizing, and in 2009 the same magazine hailed it as a "top dog." Suh left Agency.com in late 2009/early 2010 and ... here we are.

The agency spent 15 years taking every wrong turn it possibly could -- faddish name, premature IPO, off-the-books accounting, hubristic YouTube efforts. It's amazing it survived this long.

Related: