Monday Morning Quarterback: The AOL Ad Black Hole Edition
by Kara Swisher
Posted on August 20, 2007 at 4:10 PM PT
AOL=Ads Online Loser?
What can we say about AOL’s ad miss, reported in the New York Times today by Miguel Helft, except to quote an email I got from a former AOL executive today: “Ad sales and no surprises were the reason these guys were supposedly brought in.”
Oops. Indeed, more analysis of this issue tomorrow, but it’s not a very good sign for AOL head Randy Falco, the television guy brought in to inject a dose of ad savvy to the service.
AOL has had by necessity to move its business from a subscription model to one supported by ad sales, hoping to take advantage of the 90 million visitors to its sites every month.
Not quite yet, it seems. AOL execs are calling a recent decline in growth of its ad revenue, which was 40% in the previous quarter and is 16% in the most recent (compared to overall online ads in the U.S. that are expected to increase close to 29% this year), temporary and due to vast changes being made in its offerings.
Well, renovation must hurt, because AOL also lost ad market share year over year.
Another big destination, Yahoo, is suffering from the same problem, with a falloff in ad growth and also market share (only Google, which is a horse of a different color from a portal perspective, is gaining). The culprits are small sites gaining ads, as well as savvier marketers looking for better results.
Top O’ the Blogging to You!
Walt and I are considering a European edition of our D: All Things Digital conference, which we are calling EuroD, as you might know from my various posts from our trip to the Emerald Isle recently to scope out sites.
While there, we met the Irish Times’ very sharp tech reporter, John Collins, to talk about the project. He did a nice story then and last week did a very nice post about BoomTown, too.
Here is one of the many videos I did from there with Walt, where we visit Dublin Castle and Walt turns into a tour guide:
MIT Geeks Continue to Invent Scary Geeky Stuff
And here is a great video by The Wall Street Journal’s Jennifer Saranow about some new stuff being created at MIT’s Media Lab’s Computing Culture Group.
Projects include an energy-consuming meter worn on the thigh that shocks you when you use too much (for those, its inventor notes, “with global-warming guilt”) and a jacket that also delivers a jolt to those who seek to mug its wearer. Ouch all around!
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Comments
AOL’s problem is that it’s been slow to realize that, with over 100 million sites on the Internet, audiences are spending less time on major sites like theirs. Adapting to Web fragmentation means that traditional media companies have to integrate long tail strategies into their core business plans in order to leverage their brands, maximize existing relationships with advertisers and expand their reach. Advertising.com and Tacoda effectively monetize remnant inventory but do not offer the control and visibility required by brand advertisers. AOL could help their cause immensely by trying new ad strategies like using expert vertical ad networks to syndicate brand advertising to audiences from smaller, high quality sites. It would increase AOL’s ad inventory, bring in new revenue and let brand marketers reach audiences that would allow them to control the context in which their brands are seen.
Posted by Joelle Kaufman at August 21st, 2007 at 2:41 pm