Online Magic will become a wholly owned subsidiary of Agency.com, but will continue to operate under its own name for the time being.
Agency.com founders Chan Suh and Kyle Shannon will become chairman/CEO and worldwide chief creative officer, respectively, of the combined companies.
In London, Eamonn Wilmott will continue as managing director, and Andy Hobsbawm, who was formerly president of Online Magic, New York, will become chief creative officer for Europe.
The acquisition will see the London office boost its staff numbers growing from 65 to 85 employees.
According to Wilmott: "Merging Online Magic's operations into the Agency.com network is a logical step, which will enable us to continue to build on the strength of the Online Magic brand in Europe as part of the larger parent structure."
Agency.com already had a holding in Online Magic having purchased a substantial stake in the company in June 1997.
Agency.com's revenue for 1998 is expected to be (USD) 30 million, up from (USD) 13 million in 1997.