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The Digital Decade: What the Past 5 Years Can Teach Us About the Next 5

The Digital Decade: What the Past 5 Years Can Teach Us About the Next 5 Brad Berens

This year's ad:tech San Francisco conference got off to an insightful start with Fast Company Senior Editor Lynne Johnson's
onstage interview with aQuantive CEO Brian McAndrews.

Brian P. McAndrews has served as chief executive officer and director of aQuantive, Inc. since September 1999, and has been president since January 2000.

"Five years ago there was a bust," Johnson began. "How did you come out of it? How did you survive?"

McAndrews replied that aQuantive was founded on "the power of an idea… that digital would become increasingly important. Even during the downturn there was always this belief." While employees left other companies in droves, aQuantive "had a lot of people who continued to believe in where we were headed, and stuck it out because of that belief."

"There were a lot of companies that had non-sustainable business ideas… some of them were our clients," McAndrews continued. "So we lost a lot of business" in the downturn, but at the same time aQuantive was also working "to bring traditional businesses into the space, the businesses that were going to be around."

Two keys to aQuantive's growth and stability were that the company was always "looking for ways to diversify our revenue stream," which led to aQuantive's spinning off Atlas as a separate business in 2001. In addition, the company "brought in people from different spheres." McAndrews himself came out of television, and Avenue A | Razorfish's worldwide president Clark Kokich came from traditional advertising.

Given the significant rise in the industry's fortunes, Johnson asked, "What's different this time?"

"Certainly," McAndrews replied, "there is a more stable foundation in the industry now… The reality is that there are so many companies that are firmly footed" in the industry and profitable. Whereas, looking back, in 1999 marketers "recognized that people needed to go digital, but it wasn't strategic." Flash forward to 2007 and "companies are going into digital because it's good business." Companies like Time and Disney "recognize that digital is where their customers are going."

Turning the conversation to the future, Johnson asked, "Where do you think we're going in the next five years? Will we still be looking at the integration of digital and traditional?"

"All media will become digital," McAndrews replied. "You see the most significant medium of them all, television, becoming more digital… 60 percent of all households will have on-demand video in the next few years…. Digital will become multichannel. It will be much more the norm, and a key development will be in television."

With same-time viewing becoming less and less common, McAndrews said, aQuantive is working to repurpose its digital expertise into other media. For example, Atlas is working with Cable NSOs and television networks on a pilot program that inserts ads dynamically into on-demand video, and then measures the effectiveness of those ads, just like online.

Key to McAndrews' understanding of how media is evolving is his notion that "the website is replacing the thirty second spot as the central expression of a brand. That doesn't mean that television is going away, but the ability to interact deeply with a website for thirty seconds, three minutes, thirty minutes… that's where marketers are heading today."

Next: Assessing the new companies in the space

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With a rise in mergers and acquisitions -- most recently Google's purchase of DoubleClick -- Johnson asked both what motivates this activity and also about McAndrews' own M&A philosophy.

McAndrews replied, "I think the trend has been there off and on for a while. It slowed down during the downturn for the obvious reasons… and those of us who did make some bets during that time are happy that we did" because those acquisitions afforded good values at good prices. 

Nevertheless, McAndrews pointed out that it is hard to make predictions. "There are lots of companies that you haven't heard of, and two years later they're on top of their sector." Companies like YouTube and Facebook that were "not heard of two years ago" but are "now having a significant impact on the landscape."

"It's not about growth for us, it's about what our clients want, what they need," McAndrews said. This philosophy guides aQuantive into build-versus-buy decisions.

For example, when Atlas acquired a measured search company it did so because it was quicker to do so than to build one from scratch. A year later, Atlas similarly acquired a rich media company that was a proven entity. On the other hand, aQuantive launched a web video company in 2006. McAndrews explained, "With the assets we had in place, we said 'Hey, we can build this!'"

Perhaps aQuantive's most famous acquisition was when it purchased Razorfish and fused it with Avenue A in order to link website development with Avenue A's capabilities, thus creating the largest independent full service digital agency.

Turning to mobile, Johnson asked if it was simply a different beast, with no advertising standards.

"There's a healthy tension between advertisers and agencies on the one hand -- who want to push publishers for standards -- but on the other hand, advertisers want innovation and for publishers to give them creative ideas," McAndrews said. "I think a mistake can be made if we try to format mobile too quickly" because so much is changing and so quickly, and consumer behavior in one medium does not easily translate to another.

Asked about social media, McAndrews replied that, "It's here to stay. People want to have the opportunity to interact, to make their opinions known. Broadcast media are shrinking in their power to reach many people at once; viral can do it, but viral is not controlled by large media… and you have to be willing to listen to people saying bad things about your brand."

As the morning session wrapped up, Johnson asked McAndrews for final thoughts about how he assesses "the myriad of new companies" arriving in the industry.

"We have a strategy underpinning our work," McAndrews replied. "We're focused on the marketing piece. We tend to work with larger advertisers, brand advertisers… not to the exclusion of direct response, because we do that too. But generally, with big brands; we focus on the higher end, if you will."

When assessing new companies, "Our one rule," McAndrews concluded, "is to ask, 'is this relevant to our customers?'"

Brad Berens is the editor in chief for iMedia Communications. Read full bio.

A trusted advisor to companies of all sizes and a respected voice within the interactive media industry, Dr. Brad Berens has enjoyed a wide-ranging career that features storytelling as an organizing theme. These days, he divides his time among...

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