The five agencies merging in an all stock deal are Digital Effects, Idaho, Livewire Interactive, Seattle; Mediaphex; Priscomm, California, and Talaria Research, Sacramento.
The deal is being backed by venture capital firms with $2.5 million to develop operations and fund expansion. The new agency's client's include Hewlett-Packard, Microsoft, Sony and WebTV.
The new company will be headed by Chris Running, president and chief executive. He had previously been president and chief executive at BigBook.com in San Francisco.