The agency, Blue Door Media, is housed within Seven Squared's southbank offices and employs 10 staff, headed by Carey Sedgwick, editorial director, and Simon Chappell, head of new business.
Sean King, chief executive of Seven Squared, said the new unit will target small to medium businesses or "those clients who don't want to work with a bigger agency".
Blue Door Media has picked up launch clients including HobbyCraft and Lakeside shopping centre.
King ultimately plans to move Blue Door Media into new offices, but in the interim it will share resources with Seven Squared, such as IT and advertising expertise.
Seven Squared was set up in 2007 following the acquisition of Square One Publishing by Seven Publishing Group.
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