Dana Dunne: The AOL miracle man who makes you believe

AOL Europe's chief inspires his staff to feel that nothing is impossible, reports Juliette Garside

Dana Dunne has just capped his first 18 months as chief executive of AOL Europe with the completion of its £417m deal to buy London-based Bebo, the hottest social networking website to come out of Europe.

A slight man with an explosively raucous laugh, Dunne does not like to claim too much credit for clinching the deal. "At AOL we don't talk about that. It's a team effort."

But his relationship with its president Joanna Shields was crucial. They had come to know each other well through membership of the C4 advisory council, a forum of 20 leading European technology executives brought together by former BBC director-general Lord Birt.

In recent months AOL has regained some momentum, but when Dunne joined the once mighty internet company, it could justifiably have been described as in crisis.

While Google and Microsoft topped the charts as owners of the most popular websites, AOL had fallen to 13th place or lower in its three European markets - the UK, France and Germany.

In early 2006, Time Warner finally conceded that the business it had bought for a staggering $106bn (£53bn) in 2002 needed drastic surgery. The decision was taken to stop charging for services like email and sell AOL's internet access service in Europe. Carphone Warehouse bought the UK arm, and with it went the bulk of paying customers.

The money would now come entirely from advertisers - a risky strategy. Most marketing spend is not on display ads, which AOL specialises in, but on paid-for search results, where Google dominates.

The revolving door at its Hammersmith headquarters began to spin out of control, with three European chief executives, of which one was interim and one stayed a mere 40 days, before Dunne's arrival.

With an exasperated Time Warner head office thought to be ready to parachute in an American, a compromise was found.

Dunne is a native New Yorker, but has spent the past 18 years in Europe. He was already settled in London with his English wife and their two children.

His European career began in 1990. Having studied for a year in Spain and mastered its language, he decided he wanted leave his Wall Street job to work in Europe, and asked McKinsey to post him to Madrid. "McKinsey had asked me to go to New York. I refused and they sent me to do 15 interviews just so the team in Madrid could make sure I wasn't a gringo."

He passed the test, but soon moved to the London office. Then he cut his corporate teeth at two telecoms groups, US West and Belgacom.

His first job at AOL was to exit the area where it overlapped with telecoms, by wrapping up the disposal of the broadband division. Carphone's AOL staff still occupy the building next door, and the colleagues they left behind have had to find a new raison d'etre.

"We've tried to create a different organisation altogether," says Dunne. "Now we've become a web services organisation we've got to do things absolutely fabulously in three dimensions - local, regional and global."

The first move was to increase the level of content and services provided by AOL. Under his watch, the number of country sites in Europe has gone from three to 13. "That is probably the fastest digital online expansion ever done," he says. "You set a team a really aggressive objective, but then you make them believe they really can achieve it and they do."

Rather than wrapping all his content under the AOL banner, Dunne is applying a magazine publishing model, importing successful niche websites from the US.

Asylum, which was created by AOL nine months ago and is now the most popular men's website in the US, is already in the UK. Spinner, which specialises in music, is also pencilled in for launch.

The result is that AOL websites, and those it sells advertising on behalf of, are now visited by 170m people a month in the US, more than any other online publisher including Google, which has 150m visitors.

Google still has three times AOL's $5.2bn a year advertising revenue. But the great surge in search advertising is beginning to peter out, and display now has a chance to take off.

The second of what Dunne loftily describes as his "neoclassical four pillars" strategy is the creation of a top-notch advertising platform.

AOL has spent more than $1.5bn buying market share online by hoovering up online marketing specialists whose clients included many sites owned by other groups. Last week, these disparate businesses were brought together in one division.

His third focus has been to expand into new markets - AOL Poland, launched in December, now has 3m visitors a month.

The fourth is reallocating resources. AOL needed to be nimbler in keeping its services and websites up to date. The email product is now revamped every three months, and eight times as much money is spent on it.

Staff morale, damaged by job cuts and disagreements over the restructuring of the business, has also been addressed. Dunne breakfasts with all his UK employees once a month.

Dunne turned down the offer to train for America's Olympic cycling team in order to pursue his studies. It's not a hobby he has kept up here. "Competitive cycling was far easier than negotiating London roads," he guffaws.

But the career has not always come first. Aged 37, he left his job at Belgacom to spend time with his dying father. "I didn't know my father that well. It was a risk but I had a good CV. It was one of the best decisions of my life."

He then spent six years at WebTV Europe before arriving at AOL. The hand he was dealt to begin with was not a strong one, but a year and a half later AOL has moved from 13th to third most popular UK web publisher. Advertising revenues have yet to show the same improvement but Dunne is just getting started.

He cites his most recent bedtime read as the story of the Uruguayan rugby team whose plane crashed in the Andes. Left for dead, they made their way back to civilisation months later. "When you put your mind to it you can achieve remarkable things."