This document discusses the turnaround of the ICQ messaging business from 2003-2009. [1] ICQ had a strong brand but was declining, with a shrinking user base and fierce competition from MSN, Yahoo, and AIM. [2] The new strategy was to think globally but act locally through partnerships with leading media companies in key markets, providing localized clients, content and sales forces. [3] This approach led to growth, with user numbers increasing from 18.5 million in 2003 to 41 million in early 2009 and revenue growing over that period as well.

1. A Turnaround Story
Turning a Killer Application into a Growing and Profitable
Business
Orey Gilliam
Former Head of AOL Messaging and CEO of ICQ
ICQ – A Turnaround Story

2. The Good and the Bad – End of 2003
Good Bad
• Extremely strong brand • No active distribution
• Considerable community in several • Declining user base
territories • Number 4 out of the four largest
• Desktop presence – unique value global players
• Fierce competition from MSN, Yahoo! and
• History of innovation – the IM AIM
pioneers • American product – translated but not
• Superior product skills and knowledge localized
of the space • Very constraining budget
• Strong commitment of the • No ad sales force – the major revenue
organization to the brand and the generator
company
• Despite a very rough year
• No local presence
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3. The Strategy – Think Global but Act Local
• Viral distribution works much better with
the leaders and with little competition
• Must have local distribution
• A translated product is not a localized one
• Need a localized product with local content
and services
• Cannot close global advertising deals
• Advertising sales efforts are territory-based
• Relationship with the Mobile carriers may
be global
• Yet each local carrier has its own deal
Need to have local business presence in each of the target territories
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4. Strategy Implementation
Form strategic partnerships with leading Media and
Communication companies in strong ICQ territories
Give Get
• Co-branded ICQ client • Distribution via website
• Access to ICQ community in • Marketing via online and
the territory offline properties
• Desktop presence • Local content and services
• Share revenue generated • Access to local Mobile carriers
through ICQ properties • Local sales force to sell ICQ’s
ad inventory
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5. Implementation Challenges – Partners
• New deal type
• Needed to bring together various parts of the organization
• Low anticipated initial revenue
• Little attention from the partner’s CEO
• Had already been thinking about Instant Messaging and decided
not to go there
• Will ICQ beat the competition?
• IM is one of three basic services with Content and e-mail
• MSN and Yahoo! had all three
• Partner was usually bigger but MSN and Yahoo! were catching up
• Had to move the “battlefield” from IM vs. IM to Portal vs. Portal
• 9 – 12 months from lead to contract!
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6. Implementation Challenges – Organization
• “Already tried it…”
• The partners were not excited
• ICQ had to bend backwards to get the deals done
• Product and technology focus shifted to localization and
customization
• Considerable development effort to create a “cookie cutter” operation
• “Less innovation” for the end user
• More complex version management
• Less attentive partners generated animosity and frustration
• Most of the work usually was after the deal was signed
• Major Partner Relations efforts
• Focus on territories
• Territory managers responsible for revenue, users and usage numbers
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7. Execution
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8. Results – Users
Q1/01: 23.5MM
Historical record
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9. Results – Users
2003: 18.5MM
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10. Results – Users
Q3/05: < 15MM
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11. Results – Users
2005: 16.5MM
The first year of growth since 2000
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12. Results – Users
2006: 23MM
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13. Results – Users
2007: 29MM
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14. Results - Users
2008: 36MM
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15. Results – Users
Q1/09: 41MM
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16. Results – Revenue Growth (2003 – 2008)
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17. Strategy vs. On-Going Proceedings
• Several business ideas had been attempted
• The executed strategy was the combination of some of them
• The strategy was continuously adjusted as market conditions
became apparent through successes and failures
• Organization had to change to support the strategy
• It wasn’t always about what was done – it was often about
what was no longer done
• Major challenge with a mature company
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