Microsoft paid $6 billion for this Seattle ad company in 2007, and five years later wrote off almost all of it. The story began much smaller. Avenue A opened for business in July 1997, buying banner ads for marketers and measuring which ones made people click and buy. It worked out of the old Smith Tower downtown. In February 2000, with web advertising in a frenzy, it sold shares on Nasdaq under the ticker AVEA.

Counting Every Click

Nick Hanauer and Scott Lipsky started Avenue A to bring discipline to online ad spending. Most marketers bought web ads the way they bought magazine pages, on hope. Avenue A placed ads across many sites, tracked each one with its own technology, and moved money toward what worked. In September 1999 it bought iballs, a New York internet media firm, to widen its client list. The company sold both the media buying and the measurement tools behind it.

A Write-Off in Redmond

Avenue A priced its offering at $24 a share on February 29, 2000, and raised money just before the dot-com crash. Online ad budgets shrank and its stock collapsed. The company survived, renamed itself aQuantive in 2003, and grew again through Razorfish, its ad server Atlas, and an ad network. In 2007 Microsoft bought aQuantive for $66.50 a share, about $6 billion in cash, to fight Google in advertising. In 2012 Microsoft wrote down $6.2 billion tied to the deal.

Cover: A Wet Day on the Boulevard, Paris, Alfred Stieglitz. Art Institute of Chicago, public domain. Chosen for a wet day on a city avenue (Avenue A).