Assessing the new companies in the space
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.
