AOL’s Levick: We Bought Pictela For Its Philosophy, As Well As Its Tools

AOL (NYSE: AOL) and rich media startup Pictela had been working together on large, in-content ads since June, but the decision to buy the company came as AOL was refining its views of what its Project Devil display initiative should be. Asked why AOL needed to buy the company, which has and will continue to work with outside publishers and AOL’s portal rivals, Jeff Levick, AOL’s president of Global Advertising and Strategy, said “It’s bigger than the tools they bring to the table. It’s about the philosophy that we share in terms of how far display advertising can go.” As for whether there were still any other companies whose philosophies might match AOL’s acquisition needs before 2010 becomes 2011, Levick wouldn’t say.

To Levick, he liked the idea of doing a variety of things within an ad unit. “The whole point of the Pictela ad unit, which is similar to what we’re doing with Project Devil, is that the interaction, the content, exists within the unit itself,” he said. “These ads are designed to be a content-rich environment, whether its HD video or photography or something else. The point of Devil is the realization that users aren’t looking to add an extra click in their journey across the web. They want to engage with non-advertising or advertising content at a time they choose.”

The basic promise of the Pictela ad unit is that the marketer or agency can check the performance analytics of the ad in real-time and make any change they want within the unit. “This isn’t a case of go live with an ad on Monday and wait for results on Tuesday, it all happens immediately,” Levick said.

Pictela was founded in October 2008 by two former WPP Group Mediaedge:CIA execs, along with someone from Akamai (NSDQ: AKAM) and Goldman Sachs. As Matt Straz, one of the co-founders and Pictela’s CMO, said in an interview, it didn’t seem like the most auspicious time to start a display ad firm, given that the global financial collapse had just hit a month before. Initially, the plan was to start a social media marketing company and things just evolved from there.

Two things had begun happening at that time. As display was trending downward, the idea of using larger display ad unit to attract premium, higher-CPM brand advertising had begun to get traction. The idea was that online was still viewed as a largely low-cost, direct response medium. The Online Publishers Association and Interactive Advertising Bureau both began a campaign to establish new, basic formats that would go beyond to the much-maligned, “click here now” static banner format.

It also helped that the company received a huge capital and promotional boost in the form of a $1.25 million funding from Avalon Ventures and Dave Morgan, who had sold his ad targeting firm, Tacoda, to AOL in September 2007. (The Morgan connection comes from Pictela CEO Greg Rogers, who was formerly VP of sales at Tacoda.)

As part of its stance as a social marketer, Pictela’s first major ad assignment was for Disney (NYSE: DIS), which wanted a portable ad that could be shared on users’ Facebook walls. “We went from that and started producing campaigns for other ad spaces,” Straz said. They then went about getting its ad units certified with the OPA and IAB, along with approval from publishers, including Hearst Digital, Condé Nast, Glam Media, Scripps Networks (NYSE: SNI), Undertone, Microsoft (NSDQ: MSFT), Yahoo (NSDQ: YHOO) and others. Straz and Levick both said that Pictela would be encouraged to continue to work with all those clients, including AOL’s portal rivals. “We’re not just interested in changing AOL, we want to change the web,” Levick said. Straz estimated that the company could spend either 50 to 60 percent of its resources working on AOL and the rest on outside clients, though he didn’t expect much change, considering plans to staff up, especially in the engineering as well as marketing sides of the business.

New York-based Pictela will be moving from its 26th St. and Broadway address a few blocks down to AOL’s 9th St. offices by next month. It also expects that as a result of the acquisition, it will be able to double the 18-member staff within six month.

Aside from pushing the general boundaries of display, Levick is also concentrating on a fuller rollout of Project Devil. By the end of Q1, all AOL properties will have the ability to accept Project Devil ads. In the meantime, all AOL sites can immediately accept Pictela units. So far, there are three places where Project Devil ads can run: AOL’s Moviefone, Stylist and its homepage, which was recently overhauled in part to take advantage of Devil. “We’re adding five more properties this month and by January, we’ll have another five properties,” Levick said.