NEW YORK In late 2004, AKQA's newly installed executive creative director Lars Bastholm found himself sitting in a cramped office facing a wall, toiling away in a bleak stretch of lower Manhattan "so shitty," he recalls, "it doesn't have a name."

AKQA recruited Bastholm from the highly regarded Danish agency Framfab to open its New York office, part of the San Francisco-based shop's ambitious plan to build a digital creative powerhouse that would capture major accounts.

In his first days on the job -- sitting there, facing that wall -- Bastholm wondered if he'd made the right choice. He didn't have to wait long to get the affirmation he needed.

Bastholm and another new hire at the time, global ecd Rei Inamoto, successfully crafted a pitch for Coca-Cola that led AKQA to be tapped, in spring 2005, as the company's first lead global digital agency. Fast- forward to the present, and the agency boasts a stable of accounts including not only Coca-Cola but AOL, Motorola and Smirnoff. And AKQA's digs are somewhat improved, its New York base housed in a spanking new Soho space that's home to 60 employees.

"We have a portfolio of brands now that most agencies would kill for," says Bastholm.

For AKQA, 2007 marked the year it truly arrived. The agency's early bet that it could build an independent, global, creatively driven digital agency serving some of the world's biggest brands had finally paid off. Revenue last year spiked 45 percent to $99 million, with the agency adding Motorola and boosting its work for longtime clients including Coca-Cola, Nike and Visa. The shop also expanded its global footprint with outposts in Amsterdam and Shanghai.

AKQA's staggering growth, consistently outstanding creative, innovation in emerging digital channels and determination to follow an independent course combine to make it AdweekMedia's Digital Agency of the Year.

AKQA, from its inception, has charted its own course. It launched in February 2001, in the teeth of the dot-com meltdown, when most Web players were busy handing out pink slips. Meanwhile, San Francisco integrated agency Citron Haligman Bedecarre and U.K. Web player AKQA New Media joined forces with U.S. Web shop Magnet Interactive and Asian Internet agency The AdInc to create AKQA (as in "All Known Questions Answered"), with the ambitious goal to build a global integrated marketing agency with digital at its core.

"Our timing just sucked," says Tom Bedecarre, AKQA's CEO.

Creating immersive experiences is the hallmark of AKQA. Take "The Happiness Factory," the agency's re-creation of Wieden + Kennedy's award-winning spot featuring a virtual world inside a Coke machine. AKQA, working with "Happiness Factory" animation house Psyop and gaming company Shift Control, created a virtual factory where users could "apply" for work. As part of the concept, AKQA pitched potential "employees" via ads on job-recruitment sites like Monster.com. Since the site is global, AKQA devised a made-up "Happiness Factory" language, translated into subtitles according to market. The result is a wondrous, whiz-bang experience, combining casual gaming with a hyper-colorful, imaginary world inside a vending machine.



The site boasts many technological marvels that actually remain hidden from the user. For example, AKQA had to find a way to translate high-quality Psyop animation into the online world without sacrificing quality or consumer experience. So, it converted the animation into Flash, chopping up scenes and utilizing progressive loading techniques to keep the consumer experience snappy.

That was no mean feat, and is emblematic of AKQA's utilitarian approach to technology: rather than using advanced techniques just to wow users, it also is quick to find technological solutions for working out kinks in the execution of creative. That's because in its DNA, as Bastholm sees it, AKQA is an ad agency. "At the end of the day, technology is in service of an idea and not the other way around," he says. "We're not a production shop in any way, shape or form."

"They understand branding and marketing objectives need to be the focal point, then you work with the digital strategy,"says Carol Kruse, vp, global interactive marketing at Coca-Cola. "Some agencies want to jump to the cool creative or the latest technology."

It's a distinction AKQA execs never tire of pointing out. While much of its work does reside online, AKQA is not merely a Web shop that tailors a traditional agency's big idea for the digital realm. For longtime client Microsoft, for example, the agency built the online campaign for smash Xbox game Halo 3. While it did follow the creative blueprint of Microsoft lead agency McCann Erickson, it also cooked up a campaign with unique appeal to a rabid -- if jaded -- audience.

To grab the interest of Halo's devoted following, AKQA created "Believe," a Flash diorama of a battlefield inspired by the game. Of course, communicating the experience of a game by simply re-creating it in Web form doesn't do much to entice consumers. AKQA went beyond just site work, creating a viral effort directed at the hard-core Halo devotee.

AKQA crafted an alternate reality game, Iris, which tapped into the passions of Halo fans, planting clues via everything from Best Buy circulars and fake Craigslist postings to 800 numbers and ringtones. Not only did thousands of gamers take the bait, the subsequent buzz via blogs and message boards expanded the campaign's reach to some 1.5 million consumers, Microsoft estimates. "We saw an opportunity to expand that to a much greater interactive experience -- we didn't just re-create the game. We were able to give something to the fans that whet their appetites," says Inamoto.

Jeff Bell, corporate vp, global marketing in Microsoft's games division, says the agency "had to deliver the core for us so we could scale to the masses," pointing out that the campaign's eventual reach mirrored sales of the game.

While AKQA undeniably excels at Web projects, it also has been especially effective in bringing together clients with emerging digital channels. The agency's global orientation has given it expertise in mobile and interactive TV, platforms especially popular in markets outside the U.S. ("There's innovation on both sides of the Atlantic," Ajaz Ahmed, AKQA's London-based chairman, is quick to point out.)

Mobile has become an AKQA specialty. It was among the first interactive agencies to set up a dedicated mobile practice in 2006, bringing in Dan Rosen, a 10-year veteran of mobile marketing in the U.K. Since then, its mobile team has grown to 20 and wireless campaigns have been created for Coke, Visa and others.



To craft connections on the go, AKQA has concentrated on building brand utilities that improve consumers' lives, rather than just using phones as simply another place for ads. For Visa's first mobile campaign in the U.S., AKQA crafted a program around the Signature card's affluent-lifestyle brand positioning. One element invited shoppers at San Francisco supermarkets to text Visa for advice on wine and cheese pairings. In another, patrons of fine-dining establishments could receive text messages detailing menus. The Signature promotion didn't represent the latest and greatest technology -- but it was determined to be, nonetheless, a highly effective means of reaching the target. And as consumer habits and hardware evolve, AKQA has come to embrace more sophisticated techniques.

To wit, Diageo's Smirnoff made its first stab at mobile with a WAP site built by AKQA. Rather than simply re-creating the Web experience on the phone, AKQA opted for an on-the-go cocktails and nightlife guide. In the U.K., the mobile site reaped about one-third the traffic of the Web site, reports Michelle Klein, Smirnoff's global digital marketing director, who calls AKQA "at the bleeding edge. They know what's happening in the technology space and they bring those ideas to us. They have their fingers on the pulse. They came with a big idea and then blew the idea out."

The big idea is, of course, at the heart of advertising. But will technological advances change that? Bedecarré says no. While many digital agencies have gotten by with knowing technology better than the traditional shops, he posits, they will find that gap getting narrow. "We're not a one-hit wonder," he says. "It's not like we just came up with a dancing elf. We're not hanging our hat on one funny idea."

That means coming up with ideas that go not just beyond the Web but even beyond digital channels in solving business problems for clients.

Nike came to AKQA with a problem. Its 10-kilometer race in London had grown a little stale. The agency had developed the idea of having runners' finish-line photos e-mailed to their mobile phones soon after completing the race -- but the concept was soon co-opted by other events. Nike needed the next big idea.

So, AKQA proposed a new kind of event that tapped into social networking, events and music. Nike "Supersonic" used MySpace as a hub for organizing a secret, 1,000-meter sprint. The idea was for runners to compete to break the sound barrier. Runners registered for trials that took place throughout London in October. The next month, the 1,000 fastest put themselves to the test, cheered by 2,000 onlookers. London's top DJs and a light show provided entertainment.

"Other digital agencies are focused on executions and not insights and ideas," Inamoto says. "They get too hung up on how to make the Web site the coolest thing ever. We think about what is it that can excite consumers."

While AKQA is synonymous with creativity, it has always been an integrated agency with media planning and buying capability. In January 2007, it poached Agency.com exec Scott Symonds to build its media practice. It now boasts $150 million in billings and 100 people devoted to planning and buying for clients including Visa, Current TV and Comcast.

While the shop might not have the buying clout of an OMD Digital, it does have a different, perhaps more valuable advantage: big brands publishers want as partners. The old notion of leverage in media is less important in digital channels, Symonds argues.

"It's a legacy view that you need to be spending a billion," he says. "It's a commoditization of media. I think we can do more with creativity and leveraging the quality of our brands."



For Target's back-to-school promotion, it skipped the campaign site in favor of a Facebook ad campaign, the first time the retailer explored the fast-growing social network. Its "Dorm Survival Guide" included tips, checklists and the opportunity for group members to share and connect. While other corporate efforts via Facebook fell flat after going for the hard sell, the Target project took off, with over 17,000 members signing up.

At its best, the blending of creative and media end up making it hard to see where one takes up and the other leaves off.

For Visa, Symonds' team worked with the creative folks to connect the credit card company with small-business owners. The challenge: Visa's main rival, American Express, had already sewn up prominent placements on the small-business sections of sites like Inc.com and Entrepreneur.com. AKQA saw an opportunity for Visa to act as its own information hub.

In effect, Visa created its own medium, Business Breakthroughs, partnering with content providers including National Geographic, Concierge.com and Pandora to provide content for a small-business portal. Visa supplemented third-party content with its own videos of experts answering small-business questions. To ensure the target audience would find BusinessBreakthrough.com, AKQA swung a deal with MSN to create a Visa-branded channel featuring the content.

AKQA also took steps in 2007 to build capabilities in the hottest online segment: search. As more brands consider how their online and offline campaigns work in concert with search to affect brand perception, AKQA sees an opportunity to connect its site work with the most common way people find sites, Symonds says. "We're going to build killer creative sites -- but we're going to make sure they're findable."

In late 2006, Bedecarré and Ahmed were faced with a decision. When the company was formed, Francisco Partners, a San Francisco private equity firm, was its backer. During those heady days, the idea was that AKQA would go public in the near future, giving Francisco a tidy and timely exit. The dot-com bust put an end to that.

But with the digital ad market booming, Francisco was ready to cash out. AKQA hired Morgan Stanley to explore its various options in the market. The obvious course of action in a market just beginning to consolidate in the aftermath of the Publicis Groupe purchase of Digitas was for AKQA to find a home in an ad holding company.

Indeed, WPP Group had in-depth talks with AKQA, offering to buy the company. Keeping in mind their fiduciary responsibilities (Bedcarré and Ahmed are large shareholders), they had reservations about such a move. For one, AKQA's independence had always been a badge of honor, particularly in building its culture and attracting new talent. What also gave them pause was the idea that AKQA might become a junior partner to a big traditional agency network. "The problem they're trying to solve is they're broken," Bedecarré says of holding companies. "That's not as interesting to us as charting our own course."

At the same time, Greenwich, Conn.-based private equity firm General Atlantic was on the hunt for a "platform company" that would allow it to build a diversified digital marketing services company. After meeting with over 75 companies, General Atlantic managing director Anton Levy found what he was looking for in AKQA, as it had major clients with high-level relationships and a global footprint. Other, more tech-minded marketing firms, Levy found, simply didn't have the relationships. "They were relatively far down the chain of the marketing organization," he says. "AKQA has a chance to be a true strategic partner."

In February, General Atlantic bought out Francisco's majority stake in a deal worth about $250 million. Since then, AKQA bought SearchRev, a San Francisco search tech platform, part of a larger bet AKQA is making on search marketing, which Bedecarre describes as an "area underserved by the big guys because they don't get it." AKQA is now in the hunt for other tech pieces, such as an analytics company, and is in negotiations to greatly expand its media capabilities with the addition of i-Level, a U.K.-based digital media firm. Levy and Bedecarré see an opportunity for AKQA to eventually go public, particularly since Digitas and aQuantive have been acquired. "There are a lot of investors that are clamoring for a way to play this marketplace," Levy says.



For AKQA, a deep-pocketed backer like General Atlantic means it can stay independent but still have the means to compete with larger companies that have more resources. While Inamoto points out that AKQA's work has actually improved as it expands, the risk will remain that the shop will lose its edge as it expands into new markets (India is being eyed) and new marketing areas. This will inevitably mean it will face larger, more established competitors, but Bedecarré has faith that AKQA's entrepreneurial nimbleness will serve it well.

"We're always trying to take things forward," Bedecarre says, "and take a different path than others are taking."

Brian Morrissey is digital editor at Adweek. He can be reached at bmorrissey@adweek.com.