AOL's Falco Fends Off Critics At Merrill Lynch Event

by , Sep 18, 2007, 7:45 AM
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One of the greatest challenges facing AOL's bottom line is the pressure being placed on once robust CPMs, said Randy Falco, the company's chairman and CEO, at Merrill Lynch's Media & Entertainment Conference on Monday.

"There's no question there's pressure on CPMs," said Falco. "We're taking every measure to reverse that trend."

The overarching trend driving this pressure, he said, is audience fragmentation online, which is why broad-reaching ad networks have become so popular of late.

Along with AOL President and COO Ron Grant, Falco fended off tough questions from analysts regarding the fortunes of a company at a crossroads. Calls from analysts to spin AOL off from parent company Time Warner have been growing steadily since it reported slower ad growth six weeks ago.

Asked when AOL's ad growth will come in line with the market averages, Falco responded: "We feel confident that with the changes we've made, which get ahead of the marketplace, that we'll start growing more in line with the market."

Regarding CPMs that AOL could command in the future, Falco said: "Over the longer term you will see the value of this inventory actually increase over time."

Also on Monday, AOL officially launched Platform A, a new division for its ad networks, including Advertising.com, the direct-response network AOL acquired in 2004; TACODA, the behavioral ad network it recently bought for $275 million; its video ad network named Lightningcast; Third Screen Media, a mobile ad network, and AdTech AG, an international online ad-serving company based in Frankfurt, Germany.

Has AOL concluded the acquisition phase of its ad network strategy? Maybe not, was the impression given by Falco. "We think this is one of the growth opportunities we want to continue to invest in," he said. We have a lot of support from Time Warner in doing that."

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