AOL Extends Ad Uptick Into Q4

AOL earlier this month reported higher than expected revenue and earnings for the third quarter on its highest advertising growth in seven years. The latest home page ad-tracking report from Macquarie Securities suggests AOL’s ad improvement from the latter half of the third quarter is carrying over into the current quarter.

The study found sales of oversized/custom units on the AOL home page in the first half of Q4 were up 47% from the year-earlier period, and 19% from the first half of the third quarter. The home page also featured a much higher share of purely brand-focused ad units, at 53%, compared to 30% a year ago and 32% in the prior quarter.

The larger, splashier ads on AOL.com won't necessarily translate directly into higher revenue, though. Domestic display advertising for AOL in Q3 actually fell 3%, while ad sales from search and its third-party network saw double-digit growth.

Macquarie analyst Ben Schachter noted that home page display advertising overall is looking better so far in Q4. More than half (55%) of ads across yahoo, MSN, AOL and YouTube were oversized/custom formats, up from 38% in Q3 and 41% in the year-ago period.

The media and financial services categories were the largest in the first half of Q4, at 28% and 17% respectively. Consumer electronics made up 12% of ads, followed by autos and “other” (mostly consisting of education, travel and political ads), each at 9%.

After starting tracking of display advertising on Amazon.com a year ago, Macquarie found improvement across most ad metrics on the home page. The largest share of ads typically contain some combination of branding and direct response elements, reflecting the goal of driving purchases directly from the site. The proportion of oversized ads has increased to 8% from 3% a year ago.

Tags: aol, display
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