The three ISP brands have been merged under the Tiscali banner. Creative for the online activity will be developed in-house. Media was also formerly handled in-house.
Online will be Tiscali's main media channel as it tries to build its UK customer base. The company, which launched in Italy in 1998, now operates in 14 European markets.
By the end of last year, Tiscali had 7.3 million active users. It began as a regional telephone operator and ISP, which expanded across Italy and moved into other European countries by acquisition.
John Thekanady, Initiative's head of online, said: "We are delighted to be working with one of the top online brands and look forward to helping Tiscali grow its customer base."