The combined company, to adopt the Story Worldwide name, will offer a combination of media and marketing services for clients looking for options beyond traditional ads.
Based in London, Seattle, New York and Connecticut, its combined billings will be worth more than $30 million (£15.2m) this year.
Story Worldwide was formed two years ago following a management buyout of Interpublic’s former customer publishing division. Its global clients include Microsoft, Lexus, UPS and Bank of America.
Byte Interactive develops online media and marketing strategies for clients such as Unilever, Nestlé and Coty.
Jon King, managing director of Story, will continue to lead the UK operation. Byte chief executive Michael LeBeau becomes the combined group’s chief marketing officer.