Avenue A Sees Profits
The interactive agency and ad-server returns its first-ever profit on sharply higher revenue, as it hails a strengthening Internet ad market.
Online marketing and technology company Avenue A announced on Tuesday its first quarterly profit, crediting an increased commitment by traditional advertisers to the online medium.
The Seattle-based company returned net income of $1.7 million on $44.4 million of revenues, an 82 percent increase from a year ago. The profit, while expected, was larger than analysts anticipated. In the same quarter last year, Avenue A lost $4.5 million.
Brian McAndrews, Avenue A’s chief executive, said the company was reaping the gains of managing its business wisely during the downturn and focusing on growing its business with Fortune 500 companies.
“The reason [for the positive results] was largely existing clients increasing spending as they figure out that Internet advertising works,” he said in an interview with internetnews.com. “From a macro level, if you don’t advertise online you’re leaving too much of your target audience untouched.”
McAndrews said that on the micro level it meant working patiently with individual companies to convince them, through hard data, that their potential customers were online. He said Avenue A saw companies beginning small but then ramping up to larger campaigns once they were satisfied that their online campaigns were effective.
Avenue A helps companies plan and run online advertising campaigns while also offering the technology for delivering the ads. The company has three units: Avenue A; iFrontier; and Atlas DMT, an ad serving and technology company. Avenue A acquired iFrontier in December.
He said while most of the company’s business still comes from its agency business, Atlas DMT, which the company spun off as a separate company in April 2001, signed 60 clients during the year.
Looking ahead, Avenue A said it anticipates $36 to $40 million in first-quarter revenues and a small profit. For the year, the company forecasts revenues between $160 million and $180 million and net income of 14 to 20 cents a share. With $121 million of cash on the books, McAndrews said Avenue A would be interested in potential acquisitions, such as another agency business or a marketing-technology provider.
“We believe that we’re a bit of an outlier with our success right now, ” McAndrews said, “but we think others will follow.”
