Fastest-Growing's rising stars: DG Fastchannel

despicable.top.jpgDespicable Me wasn't testing well with women over 26. Overnight, NBC Universal Studios re-edited the trailer and shipped it to networks, using DG Fastchannel's delivery system, for broadcast the next day. By Richard McGill Murphy, contributor


FORTUNE -- Tinker Bell soars across my laptop screen in three dimensions, does a full somersault, emits a shower of sparkles, and then zooms straight toward me at unnerving speed. This online promo for Disney's theme parks reached me courtesy of DG Fastchannel (No. 16), a company that delivers digital advertising for a living.

Based in Irving, Texas, DG has quietly revolutionized the marketing industry in recent years by building a satellite and web-based network that provides advertising to more than 26,000 online, TV, and print publishing destinations. The company was founded a dozen years ago by radio industry veteran Scott Ginsburg, 58. Last year DG Fastchannel earned $27 million on revenue of $204 million. Its sales have grown by nearly 43% on average in each of the past three years, even as most media companies have struggled with splintered audiences and declining ad revenues.

To grasp DG Fastchannel's profound impact on advertising, it helps to understand how the industry used to work. Until just a few years ago ad agencies would create commercials, dub them onto hundreds of individual videotapes, and then mail the tapes to TV stations around the country. Agencies would either handle the copying and shipping themselves or outsource to fulfillment shops. The process was cumbersome, expensive, and, most of all, slow. "I saw an opportunity to take an industry based on physical delivery and turn it into electronic delivery," recalls Ginsburg.

Thanks to DG Fastchannel (DGIT), an agency can now finish cutting a TV spot at 3 a.m. on the West Coast, beam it to NBC's Rockefeller Center studios in Manhattan, and watch it on The Today Show an hour later. That speed allows marketers to adjust their campaigns in something close to real time, explains Dan Wolfe, executive vice president of creative operations at NBC Universal Studios. Wolfe oversees an in-house creative agency that produces promotional trailers for Universal films and distributes them to theaters and TV networks. When Universal's Despicable Me was released in early July, audience research came back showing that women over 26 were not responding particularly well to the trailer, despite heroic little-girl characters and Julie Andrews's terrific performance as the villain's demanding mom. In one night Wolfe's shop re-edited the trailers to highlight those elements and pushed them out to the networks for broadcast the next day. To date Despicable Me has pulled in more than $200 million at the box office, and several critics have noted its female-friendly appeal.

How did they do it? Between 2000 and 2009, DG invested nearly $192 million upgrading its server network to handle bulky HD files. That investment is now paying off as HD becomes the film and broadcast standard. "DG has great customer support and market-leading technology that was expensive to install," says Oppenheimer Internet analyst Jason Helfstein. "That helped them build a big client list." Today DG Fastchannel controls between 60% and 65% of the U.S. ad delivery market.

As marketers work to provide interactive experiences for ever narrower audience segments, DG's fast, robust digital network will become only more important. "The ad industry is the most exciting it has ever been," says Ginsburg, who joined the radio business in the early 1970s. "We just keep getting more rifle-shot-specific toward customers, as opposed to the shotgun approach of mass media."

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