The Original Internet Adman

Long before digital advertising was a multibillion-dollar industry, Jonathan Nelson saw the future

The advertising business has always been a place for self-invented characters. So was the Internet business in 1994, when I moved to San Francisco. That’s when I met Jonathan Nelson, now CEO of digital for Omnicom, a holding company that earned more than 18 percent of its revenue from digital in 2010. I was there to help create HotWired, a website spin-off of Wired magazine, which itself was only 18 months old; Nelson was inventing himself as one of the first Internet advertising guys in the same building where Wired and HotWired had their offices. We had lunch together occasionally, sharing gossip and stories about the craziness that quickly enveloped everyone in those early Web years.

Today Nelson lives in a large, white Victorian mansion, sparsely furnished, with a sweeping view of downtown San Francisco, which he’s been slowly if meticulously renovating since he bought it in 2002 (the folk singer Tracy Chapman was a previous owner). While we talked in the kitchen a few weeks ago, he fielded a series of work-related phone calls, cooked dinner for his two sons—divorced, Nelson doesn’t like to discuss his personal life beyond the barest details—and planned a school camping trip with his oldest son, 11 (a tent was airing out in the small backyard). We listened to music, including the new Death Cab for Cutie album, released that day on iTunes, on an iMac sitting on the prep island in the middle of the room.

A 1989 graduate of Allegheny College, a small liberal arts school near Pittsburgh, Nelson spent his first year post-graduation working at groundbreaking music venue The Knitting Factory, then on Houston Street in New York. (Michael Dorf, its owner, had graduated a couple years ahead of Nelson from the same suburban Milwaukee high school.)

Nelson landed in San Francisco in 1990, moving in and out of small jobs in the music and multimedia worlds. He even worked at Wired (everyone in those days worked there), where he built the first subscriber database for the magazine before it launched.

Eventually, he entered into vague plans with another high-school pal (who himself ended up working briefly at HotWired); they and a small circle of other collaborators were going to develop an odd amalgam of nightclub and online world, which would have both profit and nonprofit arms. None of it made much sense, no doubt because some of the inspiration, as well as some of the circle, came out of the Bay Area rave scene where there was plenty of weed, whippets and Ecstasy, among other intoxicants, which unsurprisingly led to aimless drift in the project. Nelson wanted to get serious. Soon enough he was off doing his own, more focused thing.

In late ’93 he co-founded Organic Online with three partners (including his brother, Matthew), intending to build websites. For whom, they weren’t quite sure; their first two clients ended up being an independent record label and a small publisher.

The Internet had only recently been opened to commercial activity, and the first graphical Web browser, Mosaic, was little more than a year old. The Netscape browser was still in development and wouldn’t appear until a month after HotWired launched in October 1994 as the first website to carry a blue-chip roster of national advertisers, several of them clients of the Euro RSCG agency Messner Vetere Berger McNamee Schmetterer. Messner needed someone to build its clients’ websites for them. Enter Nelson and Organic Online.

Nelson certainly fit the profile of the wave of entrepreneurs who would soon follow him into the new online ad business (a business which really didn’t yet exist)—young (only 26 when he founded his company), a little arrogant, and whip smart, although at times completely ignorant about what they were doing. “We had no idea even what industry we were in,” Nelson remembers, laughing.

He was able to present himself, however, as a viable partner to agencies and their clients because of the two sites Organic had created for the indie record label and publisher. And his relationship with Wired paid off—Nelson tutored the HotWired ad sales staff on the basics of the Web months before it launched. In return, the ad sales staff directed new customer referrals to him, and business took off.

In early 1995, he was browsing Internet technical guides in a bookstore and had a revelation. “I looked at the magazine rack, and there was Adweek and AdAge, and I thought, ‘Oh, I really should read these, because this is the business.’”

Before long, Organic had established itself, along with other pioneers like Modem Media, CKS, and Site Specific, as an Internet ad service firm. “You sort of stumble backwards into what you do,” Nelson says.

While it was building its profile in the ad industry, Organic was incubating a series of other projects, including Big Book, an Internet version of the Yellow Pages (eventually sold); the website analytics company Accrue (which eventually split off from Organic); and the open-source Apache Web server, now used by nearly two-thirds of all websites.

Within five years of picking up his copies of Adweek and Advertising Age, Accrue and Organic had both gone public, and Nelson was a multibillionaire—for two months or so on paper, anyway.

It was the height of the ’90s bubble. As founder, chairman, and CEO of Organic, Nelson held more than 51 million shares of the company’s stock when it went public in February 2000; when it closed that day at over $40 per share, his holdings in that company alone were worth more than $2 billion. At the same time he was also chairman of, and held a significant stake in, Accrue Software, which had gone public the previous year.

“It was a little freaky,” Nelson recalls. He was living in a one-bedroom walk-up rental apartment in San Francisco, a billionaire without even a parking space. Rich people he knew—people who had liquidity already—were asking him whether he was going to install bulletproof glass in his car, take evasive driving courses, hire bodyguards. “Weird stuff that was really hard to contemplate,” he says.

Those questions turned out to be mostly pointless. Just a month later, the Nasdaq peaked. By early April, the great Internet deflation was well under way, as Nelson prepared for the birth of his first child at the end of that month. By December, Organic’s shares had fallen into penny stock range, and Nelson was firing 50 percent of his staff in a single day and laying himself off at the end as CEO (he remained chairman, however).

“That just killed me, because you have to understand—I hand built that company,” he says. “I mean, many of those employees I hired personally. And I laid off 600 or 700 of them in one day.”

By 2001 Organic was private again. Omnicom had taken a minority stake in it in 1997, when Nelson went looking for a strategic investor and found that of all the holding company executives he met with, John Wren was the one he was most impressed by; in short order, Wren was elevated to CEO and Nelson had become one of his chief digital advisors, a relationship that has persisted to this day. In 2003, Omnicom bought Organic outright.

Nelson was still chairman, having gone through, as he describes it, “restructuring after restructuring after restructuring. I paid endlessly for real estate woes, because those are long-term commitments.” By 2004, Organic was stable again—it was going to survive, even as many of its competitors had either dissolved or been rolled up into other digital entities (several into Razorfish). During the same period he had also sold off Accrue. Nelson, though, was emotionally spent, mired in a personal malaise that would last for a couple of years. But he says that walking away entirely was never an option.

“Jonathan’s an old soul,” says his friend and former colleague Troy Young, president of Say Media. “The remarkable thing about him is his ability to look to the horizon. Jonathan has an ability to separate what’s important from what’s not.”

Nelson says it was Wren who finally pulled him out of the funk: “John said to me, ‘You look like you’re perking back up. Have you thought about coming across to Omnicom for real, full-time?’” He took Wren up on the offer, at first not even having a title other than chairman of Organic. He was working for the holding company from his base in San Francisco; the job was to be Wren’s chief strategic advisor on all things digital, but it wasn’t an operational role.

“At a certain point, we both came to a conclusion, which is that Omnicom really needs someone to head up digital,” says Nelson. “He said it to me, and I said it to him. And I [also] said, ‘I know I’ve either got to stay, or I’ve got to go.’ And so I stayed.” In September 2009 Wren created a new position for Nelson, CEO of digital for Omnicom, with dotted-line responsibility for all digital activities inside the holding company.

“Evangelist, educator, developing best practices, connecting people together, talking to the media companies” is how Nelson describes his Omnicom role, but he’s underplaying his impact. Inside the company it’s said he has veto power over the biggest digital advertising deals. Digital acquisitions (of both companies and technologies) also fall under his command.

But Omnicom agencies have always been considered the most independent at any of the holding companies, which makes measuring Nelson’s effectiveness difficult. There’s no all-encompassing digital unit, a la Publicis’ VivaKi (which contains both Razorfish and Digitas), and Omnicom has made few major acquisitions in the category recently, despite (or perhaps because of) being one of the most aggressive players in the early Web years.

One of Nelson’s most recent moves, however, points to his influence. He has been able to get the big platform players, including Google, Microsoft, Yahoo, AOL, and Facebook, to appoint Omnicom “ambassadors,” point people who each of its agencies can turn to when a client wants to try something custom or new.

Others question, however, how successful Nelson can be internally. “He’s supposed to be helping all the agencies there [become more] digital? Well good luck with that. Nothing against Jonathan,” says David Kenny, the former head of Publicis’ VivaKi unit, implying that the “strong CEOs” inside Omnicom may not always cooperate in such efforts.

“But he’s clearly committed if he’s still doing this,” Kenny continues. “He’s a real believer.” Kenny also notes the difficulty he had trying to recruit Organic employees in the past because Nelson inspires so much loyalty.

Asked about the extra $60 billion sellers of digital advertising inventory say they should be getting—given the amount of time consumers spend on their sites—from the likes of Nelson and Omnicom’s clients, Nelson says, “The gap is going to close. It just will. And I warn people—and this is just me being around way too long—but in ’94 we all thought people would [understand] addressability, and get accountability, and they’d move their media budgets. But there’s lots of reasons why people didn’t. We’re very conservative as a business. We’re managing billions of dollars on behalf of clients. We have to be super careful.”

But now media consumption and, by proxy, advertising consumption have, in his words, “entirely shifted. That gap will close well within our careers.”

Getting there, Nelson says, will require a shrewd media plan mated with great creative. “And creative, keep in mind, is strategy, design, and technology fused together,” he adds. “When the medium can be so malleable, creative can be a page takeover, a skyscraper, a banner, a keyword, a button, a combination of those. The idea is to insert re-innovation and creativity into relationships.”

On a later visit with Nelson at his Madison Avenue office, he showed me on a computer an example of what he wants online advertising to aspire to—the site created for Arcade Fire called The Wilderness Downtown, an interactive film collaboration between the music video director Chris Milk and Google Creative Lab. Type in the street address where you grew up, hit enter, and the video of Arcade Fire’s song “We Used to Wait” from its album The Suburbs begins to play, segments of it appearing in a series of HTML5 windows that pop up on cue. Soon a window opens with a satellite view from Google Maps, which slowly hones in on the address you entered. The message of the song has been merged with personal information in a way that’s unique to each individual. “Where’s the thing that sends a chill up your spine?” Nelson asks. “There.”