Dana Dunne likes challenges – specifically, the kind of long-term, long-distance task that tests a man on many levels. For a running fanatic such as he, marathons are an obvious target, more than 26 miles of relentless, exhausting effort ending in an adrenalin rush of satisfaction and achievement. Not surprisingly, he has the London, Paris and Washington marathons under his belt.

But he seeks the same kind of challenge away from the roads in the commercial world, and that is why the chief executive of AOL Europe is intent on achieving perhaps his greatest feat yet – of building the AOL brand in Europe and trying to make it the first port of call for internet advertisers.

After the tumultuous merger with Time Warner at the turn of the millenium – in which a goodwill write-off caused AOL Time Warner to report a loss of $99 billion in 2002 – and the increasing dominance of Google, AOL has taken a back seat in recent years. However, the internet group has undertaken a dramatic shift in strategy as it strives to develop the brand and Mr Dunne has the task of helping to transform the once paid-for internet-access company into a free service, fully funded by online advertising. The icing on the cake came late last year when AOL moved its headquarters from Dulles, Virginia, to New York, bringing it a step closer to adland.

In 2007, the internet group expanded its presence in Europe from three countries to eleven in only 11 months. Spending the past year making a series of advertising-focused acquisitions, including Third Screen Media, a mobile advertising platform, Truveo, a video search engine, and Tacoda, a behavioural targeting company, AOL surprised the market last week with the proposed acquisition of the social networking website Bebo for $850 million (£428 million).

Mr Dunne, who worked at McKinsey Partners’ telecoms practice throughout the 1990s, as well as at JPMorgan Chase, US West International and Belgacom, said that AOL was not merely following a trend. The Bebo purchase, he insisted, was in keeping with AOL’s strategy of attracting advertisers through a strong free content offering.

“Bebo is a remarkable business,” Mr Dunne said. “We think it engages with its users more than rival sites. It is also a great geographical complement to AOL and already has a presence in most of our territories.

“KateModern [the Bebo show of which Mr Dunne is a fan] wasn’t just a one-off. Other shows coming up, such as Gap Year, will be a success and should appeal to advertisers.” This despite increased industry scepticism about the appeal of social-networking sites to advertisers, on the ground that it could be viewed as an invasion of privacy.

As AOL strives to get its message across to the advertising community and to attract new users loyal to rivals such as Google or Yahoo!, Mr Dunne said that he needed time to attract customers. He believes that the potential £22 billion acquisition of Yahoo! by Microsoft will prove to be an opportunity in AOL’s mission to win advertisers.

“Considering the amount of time it will take for a deal to go through and the resources that would go into it, I think it gives AOL a nice window of opportunity to put across our message,” he said, refusing to comment that AOL had held talks with Yahoo! about a potential tie-up. The Bebo acquisition is surely a sign, though, that Time Warner has plans that do not include Yahoo!.

Working out the best strategy for AOL has been a key challenge of Mr Dunne’s role at its European division. He said that his strategy was focused on “four main pillars”, which include improving free products and services, international expansion, building advertising platforms and deciding how budgets are best spent.

He has shrugged off concerns that his advertising-funded model could come under pressure in an economic slowdown. “Advertiser money is following people online,” he said. “The malaise people are speculating about is certainly not happening online. The shift online will continue for years to come and there is no sign of it plateauing.”

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