Q&A: aQuantive’s McAndrews

NEW YORK As CEO of aQuantive, Brian McAndrews leads a fast-growing ad company that saw its 2006 revenue increase 43 percent. Some analysts see aQuantive as the model for a new kind of holding company that combines an agency business (Avenue A/Razorfish) with a technology unit (the Atlas ad server) and media arm (the DrivePM ad network).

The company has tabbed international expansion of Avenue A/Razorfish as a major priority, last month establishing a presence in Japan through a joint venture with Dentsu.

What’s behind the international expansion of Avenue A/Razorfish?

It’s an opportunity to better serve our clients in the U.S. A lot of our U.S. clients are global businesses. They want to have support outside the U.S. like they do here. They want Avenue A/Razorfish supporting them in other countries. In terms of new business, there are clients who are looking for agencies like Avenue A/Razorfish but they want a global presence. We started seeing that a couple years ago, and we even lost out on some opportunities because we didn’t have a global presence. Now we do. It makes us a player with some global pitches that we wouldn’t otherwise. There are also a lot of strong markets outside the U.S. that represent a lot of business opportunity. Some of those markets are growing faster than the U.S.

Do you have U.S. clients that have begun using aQuantive agencies abroad?

The only one we’ve named is Starwood. It’s been a New York client for a while and is now working with DNA [in the United Kingdom]. There are a handful of others we’re not able to talk about publicly. Samsonite is an example of a win we got because of the global network. It’s working with the U.S. and U.K. and over time will be working with other agencies in the network as well.

Do you anticipate an increase in global interactive pitches?

Yes, but not exclusively. There’s lot of business that’s U.S. only or U.K. only or China only. We’re certainly very interested in that business as well. We think as digital media is maturing a bit it will be more common for big global companies to have the same desire to have the same agency working with them in multiple countries.

Do you expect further expansion? What areas?

Yes, we do. We’ve done a lot fast. We’re not sure we’ll keep the same pace. We do expect to see more international expansion. Our main target areas remain Western Europe and Asia.

You’ve spoken for a couple of years about the Web site eventually becoming the central expression of a brand. How close are we to that being a reality?

I’ve said for a while that it will become, but now I’ve changed that to it is becoming. I think we’re there in a lot of ways. TV still has great power, but what we’re seeing is that advertisers recognize that when people want to learn about something the first thing they do is go to the Internet. The Web site is the brand’s first impression, so it better be good. People are investing heavily in their Web sites. With increased penetration of broadband and Web video, the richness of the experience and interaction can be really significant. With one of our clients, Coors Light, you can go on their Web site and play irreverent videos targeted to the young adult male of their target. They’re not selling beer online, but they are creating a real relationship with their customer. It’s here, and the people investing in it now are very smart.

AQuantive is a unique model in that it combines a services business with technology and media. What are the advantages of that?

It’s been great for us culturally because our belief is digital media is much more about technology than offline media. Both are about service. It’s important in any agency environment, but technology is much more important in the digital world. When we think about Avenue A/Razorfish, it is a service business that differentiates itself with technology. The flip side is Atlas is a technology business that differentiates itself with service.

How does that help with finding new business opportunities?

When we come up with innovations, sometimes they are driven by the fact that we have this technology and services background. When you think about DrivePM. We created it from scratch. That came out of the fact that we had Atlas targeting technology, but we also had relationships and understanding of media from our agency heritage. Another company in Atlas’ space alone or Avenue A/Razorfish’s business alone would never have created it. It took aQuantive having both pieces to have enough understanding to successfully create DrivePM.

What do you think of talk that private equity firms will bankroll “the next aQuantive?”

Imitation is the sincerest form of flattery. I think there are people who see our success and say, “Is there something there?” I do think it’s harder to piece together than build organically. We started as an agency with great technology, which we separated out into Atlas and then created DrivePM. The acquisitions we’ve made, with the exception of Razorfish [in 2004], have been smaller. It would be hard to start from scratch, slap three companies together and say we have a new aQuantive. If someone wants to try, more power to them.

With Digitas now part of Publicis, aQuantive is the only large digital ad company unaffiliated with the major holding companies. Do you end up hitting a wall being disconnected from the offline marketing that still drives advertising?

No, I don’t think so. I believe all media will become digital. Our belief is all agencies will be digital agencies. If we were going to hit that wall, we should have hit it when offline was 98 percent of all spending instead of 95. Soon it will be 90, then it will be 80. Digital marketing will become stronger and stronger. We intend to play our role in that world as it expands.

Does that mean aQuantive will move into areas we now think of as traditional media as they become digital?

Absolutely. The expertise we bring, both on the Avenue A/Razorfish side and the technology side, will become increasingly relevant to other media as they become digital. We expect we’ll provide our services and technology for all media as they become digital.