Digitas Inc. started off life in 1980 designing direct mail pieces and running telemarketing operations for clients.

Then along came the Internet and email. So nine years ago the company transformed itself, changed its name to a combination of “digital” and “veritas”and is now one of the hottest, Internet-oriented advertising agencies in the country.

In fact, Digitas is where Madison Avenue and Silicon Valley converge. “At first we just built Websites and technology for clients, then we became more of a marketing agency,” the president of Digitas New York, Joanne Zaiac, said. “We took our history in direct advertising and focused on digital marketing.”

The result: Digitas has earned the trust of many advertisers who want to utilize its specialized, on-line expertise in partnership with those services provided by more traditional advertising or public relations agencies.

“We are there designing campaigns with other agencies at the beginning, not the end as an afterthought,” said Mrs. Zaiac, a native of Miami and Harvard graduate.

Digitas is publicly-listed (NASDAQ: DTAS) with 1,200 employees and has offices in five cities which service some of the biggest corporations around. Its clients include American Express, IBM, Samsung, Pfizer and General Motors. Mrs. Zaiac runs its New York office, which employs 650, and also quarterbacks the Amex account and others. Digitas is Amex’s on-line agency-of-record and has worked, along with Ogilvy & Mather, on its popular “My Life, My Card” collection of vignettes. O&M executed the traditional advertising vehicles.

“We were at the table from the get-go at the insistence of the CMO [Chief Marketing Officer] of Amex,” the Digitas creative director, Lincoln Bjorkman, said. “Our job was to create the online experience.”

Digitas also helped Amex, as a sponsor to the Tribeca Film Festival, by creating the “My Wildest Dream is…” 15-second video competition on-line. The actor Robert DeNiro judged submissions, along with other Tribeca founders, and the winner got a free trip and one-week stay at the festival. Digitas also advises advertisers on how best to utilize Google, which auctions off key search words to clients who want their text advertisements to appear beside specific search results.

“We advise them about Google. We also design client Websites; online advertising; send out e-mails [only to responders who invite them], and operate call centers for advertisements that promise a click-to-chat option,” said Ms. Zaiac.

The Digitas online approach differs from traditional advertising.

“We have gone from a push, to a pull, marketing model. We are not throwing out messages but are trying to intrigue consumers into finding us,” she said. For instance, Digitas created Amex’s Web-based “wish list” Website where consumers can sign on for e-mail notification of quarterly contests.

“We give away stuff like three $56,000 cars for only $5,000 to the first three who request it. We do these every quarter and get nine million hits on the site,” said Mr. Bjorkman.

The firm has also created Web-based content for IBM in the form of a unique, on-demand Website that included a video “podcast” series for top-level chief information officers at corporations.The site is designed to be a useful and educational online “network” for executives who make huge equipment purchasing decisions. It is also designed to generate leads for IBM as well as to educate these decision-makers about IBM’s offerings. Driving its content creation is a division which calls itself the Creative Technology Powerhouse. It includes 30 designers/Website developers who combine artistic talent with technological know-how.

“Everyone in this sub-group is a creative technologist and knows all the software,” said Mrs. Zaiac. Not surprisingly, the firm’s demographics match those of the Internet audience. It is young, affluent and very hip. Most of the employees are in their twenties. In fact, there are signs throughout the firm’s airy and spacious Park Avenue South offices about its mentor program.

But the age level may be changing along with the online market. The advertising pie grew 37% this year to date over the previous year and is a reflection of an older user base. “The young are still the most avid users but older people are becoming heavy users,” she said.

As that trend continues, firms like Digitas will grow or attract the attention of the six global holding companies that have snapped up these tech-savvy firms.

Recently, one analyst speculated that Digitas’s underperforming stock price makes it a desirable takeover target. If so, Digitas will be where Madison Avenue, Silicon Valley, and Wall Street converge.