Dana Dunne has just capped his first 18 months as chief executive of AOL Europe with the completion of its $816 million deal to buy London-based Bebo, the hottest social networking Web site to come out of Europe.

A slight man with an explosively raucous laugh, Mr. 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 the former director-general of the BBC, John Birt.

In recent months AOL has regained some momentum, but when Mr. 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 Web sites, AOL had fallen to 13th place or lower in its three European markets — Britain, France, and Germany.

In early 2006, Time Warner finally conceded that the business it had bought for a staggering $106 billion in 2002 needed drastic surgery. The decision was taken to stop charging for services like e-mail and sell AOL’s Internet access service in Europe. Carphone Warehouse bought the British 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 specializes in, but on paid-for search results, where Google dominates.

The revolving door at the AOL 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 Mr. Dunne’s arrival. With an exasperated Time Warner head office thought to be ready to parachute in an American, a compromise was found. Mr. 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.

“We’ve tried to create a different organization altogether,” Mr. Dunne said. “Now we’ve become a web services organization 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 said. “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, Mr. Dunne is applying a magazine publishing model, importing successful niche Web sites from America. Asylum, which was created by AOL nine months ago and is now the most popular men’s Web site in America, is already in Britain. Spinner, which specializes in music, is also pencilled in for launch. The result is that AOL Web sites, and those it sells advertising on behalf of, are now visited by 170 million people a month in America, more than any other online publisher including Google, which has 150 million visitors. Google still has three times AOL’s $5.2 billion 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 Mr. Dunne loftily describes as his “neoclassical four pillars” strategy is the creation of a top-notch advertising platform. AOL has spent more than $1.5 billion 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 3 million visitors a month.

The fourth is reallocating resources. AOL needed to be nimbler in keeping its services and Web sites up to date. The e-mail 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. Mr. Dunne breakfasts with all his British employees once a month.

Mr. Dunne 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 civilization months later. “When you put your mind to it you can achieve remarkable things.”