NEW YORK In 10 years, aQuantive has grown from a small direct response media agency into a global ad company with multiple business lines. Microsoft last week acquired aQuantive for $6 billion, giving it a higher valuation than Interpublic Group's.
AQuantive CEO Brian McAndrews discusses why Microsoft is the right fit, the future of Avenue A/Razorfish and why Martin Sorrell is taking a page from aQuantive's playbook by acquiring 24/7 Real Media.
Q: AQuantive has thrived as an independent, charting a much different course than the typical ad agency model. Why sell to Microsoft?
A: I wouldn't say now is a bad time to be independent. This opportunity arose to be part of Microsoft. What excites us about it is this: Everything we're doing, we get to keep doing, but on an accelerated timetable. It gives us the ability to do more—faster—because of the resources and complementary capabilities that Microsoft brings to bear.
How do you manage the conflict of Avenue A/Razorfish being part of Microsoft?
The kinds of conflicts you might talk about we've been managing for years successfully. Avenue A/Razorfish for us has been a great source of innovation and feedback for our technology division. A lot of Atlas innovations have come because Avenue A/Razorfish clients have needed things. Avenue A/Razorfish has been a great source of information and innovation on both the Web development side and the Web media side. That will continue within Microsoft. On the Web development side, you've got things like Vista and Silverlight that developers use. That will be great feedback. AQuantive is an unconventional-by-traditional-standards entity that's been incredibly successful. There's no reason it won't be even more successful as part of Microsoft.
But isn't it different having the largest buyer of interactive advertising married to one of the largest sellers? The scale is quite different from Avenue A/Razorfish buying from DrivePM.
The scale is bigger. In this industry there's a lot of moving parts and different businesses that are competitors in some areas and partners in others. I see it as the unique versus the traditional world in some ways. Even in that [traditional] world you have holding companies with research firms that other agencies use. At the end of the day, clients are looking for the best technologies and service, and where those come from can depend on a number of factors. We've been successful because our model has more than one piece.
Is the line blurring between media and technology companies?
I think there's a blurring, because in digital media, technology is such a part of it. That makes it distinct from traditional media. To be really good at digital media, you have to be good at technology. That's a key differentiator for Avenue A/Razorfish in the marketplace both on the Web media and Web development side. Technology is so key to digital. You could ask similar questions of Martin Sorrell right now. I think he's looked at our model and said, 'Boy, technology is really important.' So he did something that would be considered unconventional [buying 24/7 Real Media]. People are recognizing how important technology is, how the combination of technology and service is a very strong combination.
Talent is a huge issue in the interactive industry. Any concerns the acquisition will cause people to leave?
In a lot of ways, it helps. People are very excited about taking this company to the next level. The resources we'll have [will allow us to] compete and be innovative. People came to aQuantive because they want to innovate and want to win. By combining with Microsoft, all of those things will get stronger. It's the largest technology company in the world. The space is growing rapidly, and now we can grow even faster internationally. Scale matters in technology. There are only so many companies that are going to have the scale to compete and really provide advertisers and publishers with the tools and services they need to maximize their revenue. We're clearly going to be one of them.
Does this make Microsoft a competitor to agencies?
Microsoft's position is they partner with agencies. With Atlas we'll continue to partner with agencies. The benefit of having an agency is we're very agency friendly. There are some concerns some players want to disintermediate agencies. Microsoft is making it very clear that's not what they want to do. They want to partner with agencies as we at aQuantive have done for years.