AOL Continues Ad Turnaround, Posts Third Consecutive Quarter Of Display Growth
AOL continues its display advertising turnaround, reporting an 8% jump in third quarter advertising sales, thanks to a dual strategy of third-party network sales and enhanced premium display advertising sales related to its so-called “Project Devil” initiative. While the ad revenue surge came amid a third quarter earnings release showing a 6% decline in AOL’s total revenues, the drop came mainly from non-advertising sales related areas, especially its Internet access subscriptions business, which is part of a longer-term shift of users from dial-up to broadband services.
"AOL grew global advertising by 8%, driven by 28% and 15% growth in third party network and global display advertising revenue, respectively, substantially closing the gap to revenue and eventual profit growth," Chairman-CEO Tim Armstrong said in a statement, adding, "We continue to build strong consumer experiences as we execute our strategy to build the premium branded media company for the Internet.”
A key component of AOL’s consumer experience strategy has been focused on the amount and type of display advertising it serves to its users, and especially Armstrong’s ambitious Project Devil initiative, which dramatically reduced the number of ads sold per AOL page, but created new super-premium advertising units that the ad industry generally calls “portrait units.” The rise in AOL’s display ad sales indicates the strategy is paying off, amid a rapid deterioration in AOL’s other revenue streams, particularly subscription revenues, which declined 22% during the quarter.
As a result, AOL’s total revenues fell 6% to $531.7 million from $564.2 million during the third quarter of 2010.
However, advertising now accounts for 59.8% of AOL’s total revenues, up from 52.0%, which is a pretty significant gain amid a volatile period in the advertising marketplace.