AllAdvantage: Fall of 2000

By Thomas Hellmann, Tyra Mariani, Pat Spenner
2001 | Case No. E117
AllAdvantage was founded in February 1999 as an information intermediary between a member community of Web surfers and Internet advertisers: with its PDO technology (the Viewbar), it aggregated data while paying members to serf the Internet and it delivered targeted advertisements to them on behalf of paying advertisers. To fund its member community and technology development, AllAdvantage sought an IPO. Underwriters pushed the company to adopt an aggressive growth model that would burn $600 million and require 3 years of growth before becoming profitable. In spring 2000, however, the NASDAC began a steep descent. Internet companies were hit hard and advertising rates headed downwards. In mid-July, AllAdvantage announced the delay of its IPO for an indefinite period, and approached its investors for a fourth round of funding. Investors set strict performance goals that would jeopardize the company’s future if not met. In the summer of 2000, AllAdvantage reorganized the company into 3 teams to focus on (1) member community and its costs, (2) generating revenues through relationships with advertisers, and (3) allocating technology and engineering resources. This case provides the context from which to discuss AllAdvantage’s strategic options during a period of rapid change that required a fresh strategy in order for it to survive to its IPO.
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