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Microsoft to buy Seattle’s aQuantive

In a bid to challenge Google for a bigger share of online advertising, Microsoft has agreed to pay $6 billion for a global ad agency that almost collapsed during the dot-com bust

On the southwest corner of Second Avenue and Marion Street in downtown Seattle, an old-world building harbors a new-world company. Step off the ornate elevator on the 18th floor of the art deco Exchange Building, and you find the sleek, softly lit lobby of fast-growing Internet advertising company aQuantive Inc. Black leather chairs crackle when you sit in them. The receptionist’s phone sounds like bubbling water when it rings.

“Uh-Quantive,” the receptionist answers.

AQuantive’s chief executive officer, Brian McAndrews, a towering, angular-faced man, smiles warmly as he welcomes you into his modest corner office. He moves and speaks with the self-confidence of a man who’s collected more than a few successes in life. He’s a graduate of Harvard and of the Stanford Business School. He’s managed large operations at ABC television. And now he’s taking on his biggest challenge yet: bringing order to the new media revolution. “As all media become digital,” he says, “we are going to be there.”

It’s difficult to doubt him. McAndrews, 48, is firmly planting his company across a global media landscape where blogs, streaming videos, online ads, super-interactive websites and user-generated content are challenging old media, and rearranging the way we relate to each other, inform and entertain ourselves, and buy everything from cars and mattresses to shoes and books. In little more than a year, aQuantive has swept into international markets, acquiring companies or securing stakes in companies in the top countries in the world as ranked by online ad spending, including Britain, Japan, Australia, Germany and China. The mission is to make aQuantive the worldwide, one-stop-shopping provider of creative branding and advertising accountability. “We’re not buying companies to grow,” McAndrews says. “We buy capabilities and geography.” AQuantive’s focus on developing the most advanced technological capabilities is helping shift advertising from an art to a science. In the past, advertisers splashed their 30-second TV spots, mailed their product catalogs and crossed their fingers, hoping their messages hit home. By contrast, aQuantive is using technology to measure online behavior, infusing the sexy and powerful but uncertain business of advertising with state-of-the-art methods for measuring the effectiveness of an ad.

McAndrews’ work is hardly finished. He’s planning more moves into international markets. And he’s mulling how to best position aQuantive to take advantage of a world in which people increasingly want content, be it video or audio or text, at a time of their choosing. McAndrews leads by a strategy that embraces change, focuses on results for clients ranging from Levi’s to Red Bull and that adds the best tools to the online toolbox. It’s working. The company’s profits have ballooned as online ads have surged. For 2006, aQuantive’s profits climbed to $53.9 million, up 53 percent, on a 43 percent increase in sales to $442 million.

The company is smartly moving into growing international markets, says Emily Riley, an analyst for Jupiter Research. But the company also faces the long-term challenge of making all the parts it has quickly acquired complement each other. “Getting everybody up to speed and getting everything streamlined is going to be one of their major initiatives,” she says.

AQuantive is aware of the challenges and pitfalls. “We have limited experience in managing foreign operations, in developing localized versions of our products, and in marketing, selling and distributing our products and services internationally,” the company said in a filing with the Securities and Exchange Commission. “... Our international expansion will require management’s attention and resources ...”

1 Comments »

  1. Louis said, Saturday, 19-05-07 13:18 Ultimately, Microsoft needs something it cannot buy: to be perceived as good guy and not as a bully. It needs someone like Jeff Bezos to show it how to be customer-friendly. The Microsoft experience needs to be egalitarian, not imperial.

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