Avenue A Reports Q3 Profitability

Interactive marketer Avenue A reported it achieved a quarterly profitability in Q3 with revenues up 68% from a year ago to $34.4 million and a net loss of $677,000. The company expects it will reach complete profitability by the end of the current quarter.

Pro forma net income was $62,000, which didn’t include the amortization of deferred stock compensation and intangible assets. But it was better than Q3 2001 results, which found the company’s pro forma net loss at $3.3 million. Q3 2001’s net loss was $6.6 million.

President and CEO Brian McAndrews said Thursday that the positive results were driven by some new clients on the agency side of Avenue A’s business but mostly by existing clients spending more money and finding out what works in online campaigns.

Avenue A launched a number of key campaigns in Q3, including the interactive rich media portion of retailer Eddie Bauer’s repositioning and Best Buy’s back-to-school rich media campaign that focused on computer products. Best Buy’s direct-response measured campaign ran on major shopping sites and portals had a great response, the company said.

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The five-year-old company includes the interactive agency and a second unit, Atlas DMT. It recently introduced a Brand Optics survey that studied shopping behavior online; McAndrews said it links survey behavior to actual results to find whether people who said they would purchase more did. Atlas DMT developed the Atlas Digital Marketing Suite 3.0, an ad serving and campaign management platform. McAndrews said another Atlas DMT product, the GRP reach and frequency forecaster, was the first to forecast what a media plan will do for reach and frequency online. He said that as more traditional advertisers look to online they’ll be asking for online media metrics that compare with the offline world.

Avenue A projects continued growth for Q4, with revenues between $35 million and $38 million. One big driver of the Q4 growth will be the recent launch of the campaign for MSN 8. Avenue A is handling the interactive portion of the MSN campaign. McAndrews said the Q3 results and Q4 projections prove that online advertising works and that many advertisers realize that.

“We’re very bullish [on the future]. We believe the online ad recovery is beginning,” he said. McAndrews said there’s definite growth in online advertising spending and that the trend toward daypart advertising to snag the at-work Internet audience will continue. He said a recent Avenue A survey found a ripe audience for the at-work Internet users, many of whom are more likely to purchase online.

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