The World: Capital and innovation are key to AKQA's growth

With its sexy clients and success in the US, AKQA has a strong global presence. So where next, Jennifer Whitehead asks.

Ajaz Ahmed and Tom Bedecarre, respectively the chairman and chief executive of the digital agency AKQA, make an odd pairing.

Ahmed, who founded AKQA in 1995, is in full salesman mode and his enthusiasm and looks make him seem even younger than his 34 years. Bedecarre, a native San Franciscan, is more sober and thoughtful, answering questions directly and to the point.

But their differences must complement each other, because the pair have worked together for ten years and built up an agency of 700 staff in offices in London, New York, San Francisco, Shanghai and beyond, with long-standing client relationships with famous brands such as Microsoft, Orange, Nike and Sainsbury's - all of which have been clients of AKQA's for ten or more years.

AKQA has been that rare success story - a UK-founded agency that has made it in the US. In fact, it probably has a better reputation for its US work, and sexy client list including Apple, Nike and, if rumours are to be believed, Virgin Atlantic, than it does for the work coming out of its London office.

Bedecarre disputes that the US business is more successful than that in the UK, saying that the split between the two countries is about 50:50 in terms of billings and staff, and that some of its sexy client accounts are based here - namely Fiat and Unilever - while the Coca-Cola and Nike accounts are run jointly between the US and the UK.

"We don't talk about AKQA London or AKQA New York, it's just AKQA," Bedecarre points out, saying that there is a lot of movement of staff between its offices, and that it's not unusual for a pitch team to comprise of people from two or three or more locations.

AKQA is a difficult agency to pigeonhole and is unusually secretive, which is one of the reasons it does not appear more frequently in the pages of Campaign.

Ahmed explains that the company has five areas of service, which are interactive experience, e-commerce, content creation and distribution, interface design and new product development.

The breadth of service makes it an easy place for clients to go with their "new media" marketing problems, although it is fair to say that its creative reputation on this side of the Atlantic lags behind that of advertising purists such as Dare and glue London.

It has proven it can create campaigns with mainstream appeal, such as a film it made for Coca-Cola in 2006 in which Wayne Rooney gives a rather impressive display of his football skills with a can of Coke, watched by ten million people worldwide.

But it is often with work such as the stunning "believe" campaign for the Xbox game Halo 3 that it really shines. It created the website element campaign - a detailed diorama whereby users could take an up-close tour of the characters and weaponry in a game - rather like a frozen scene from a battle.

"There's a geeky side to our business that we've always had," Bedecarre says. "We come up with ideas and we execute them. Sometimes ad agencies talk about crazy ideas but they don't really understand the feasibility of executing them. Having that breadth is something our clients value. We're not just an agency that does banner ads."

However, one area of service that AKQA is looking at developing is its media business. It has a significant offering in the US, but would like to increase it in the UK. Last summer it hired OMD UK's Michael Aneto to head media planning in London and Bedecarre says that it would like to build the practice organically, but that it is also looking to grow where appropriate by acquisition.

Last August, the agency bought the search engine marketing technology company SearchRev for an undisclosed sum. Now its name has been connected to acquisition talks with i-level. Bedecarre says that while the agency is a "quality shop that we admire", he says that AKQA is not involved in negotiations with the company.

However, he says that SearchRev is being maintained as a separate brand and it is possible to see in the future that other brands will be brought into the AKQA fold but run separately.

As part of its international expansion, AKQA is working on building up its Amsterdam office. It was hit by the defection last month of the executive creative director Martin Cedergren to rival independent 180 Amsterdam, but Bedecarre and Ahmed hint that it won't be long before the office reveals its first big client win.

With the arduous process of setting up an office in China now over, Bedecarre and Ahmed say India is now an option, as clients are interested in expanding there. Australiophile Ahmed, who likes to spend as much time in Sydney as possible, says that Australia is on the cards too. However, don't expect an AKQA to set up a massive international network. "I think that having an office in every city is an old-school model," Bedecarre says.

Flotation on the stock market in London or New York is also something that Bedecarre and Ahmed are going to be looking at this year.

It kicked off 2007 by selling a majority stake to the private equity investor General Atlantic. Terms of the deal were not disclosed, but reports - possibly exaggerated - suggested the deal was worth $250 million.

Although the jittery markets do not seem to be favouring marketing communications companies at present, given the accepted wisdom that they are more vulnerable to pressure on profit margins in the advent of an economic downturn, Bedecarre feels there is an appetite from investors for digital stocks.

"We hear a lot from bankers who would love for AKQA to float and we will take a serious look at it in 2008," he says.

"As we continue to grow, it would be helpful to have more access to capital. And there are not that many chances for investors to participate in the expanding digital markets at present."

Records filed at Companies House show that AKQA moved into profit in 2006, making a pre-tax profit of £2 million on turnover of £22.5 million. This compares with a pre-tax loss of £791,483 on turnover of £14.3 million in 2005.

Bob Willott, the editor of the Marketing Services Financial Intelligence newsletter, says that the improvements last year were partly down to doing a lot of work in London for overseas offices.

In the past, the agency has not always disclosed figures leading to suspicions that it might not be running a profitable operation, but you can't argue with the fact that the AKQA name is still going strong, when contemporaries such as Deepgroup, Wheel and Victoria Real have gone under or been folded into bigger agencies.

However, it is hard to assess the agency's appeal to stock market investors because, as a privately held company, its full financial details are not available.

"The real problem is that no-one knows how AKQA Inc is doing," Willott says.

While its financial affairs remain under wraps, industry accolades - no doubt driven by Ahmed's desire for recognition - are not in short supply. In the UK, the industry magazine Revolution (also published by Campaign-owner Haymarket) found that in the ten years to 2007, AKQA had won more of its awards than any other agency. It has been named digital agency of the year by US publications including Adweek and Advertising Age, and Fast Company magazine listed it this year as one of the world's 50 most innovative companies along with the likes of Apple, Facebook and Google.

Ahmed highlights the fact that it is tempting for agencies in this business to go off in directions that don't reflect their core values and to lose focus on what they do best - but is determined to resist.

"We're not trying to become an ad agency. We think we've found our own niche. We've got to remain innovative and not be swayed by temptations," he says.

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