• by Joe Mandese  @mp_joemandese, February 2, 2011

AOL's total revenues fell 26%, while advertising sales plummeted 29% during the fourth quarter of 2010 versus the same quarter in 2009, according to an earnings release distributed this morning. Display -- especially domestic sales -- were the strongest component of AOL's fourth-quarter advertising pie, although its overall display revenues also declined 14%, as international display sales dove 53%. Search and contextual sales also fell precipitously, dropping 34%.

AOL attributed its international display decline to the sale of Bebo and ICQ in 2009, which made for tough comparisons in 2010.

AOL said declines in its search revenues were related to "fewer domestic queries," which was due to a 23% drop in domestic AOL subscribers and lower traffic on AOL's properties.

AOL said its domestic display ad sales fell due to "a slight decline in domestic premium inventory sales as well as less AOL Properties inventory monetized through our network, resulting primarily from our efforts to improve the consumer experience."

AOL has taken some bold steps to limit the overall amount of advertising clutter its users experience, as part of a strategy to improve the long-term user experience and advertising effectiveness of its display advertising -- which is one of the reasons it acquired Pictela, a company that serves extremely high-definition display advertising experiences.

"I am very proud of what we accomplished in 2010 as we began the year with a significant restructuring of AOL and ended the year with a significantly improved balance sheet, a number of exciting new products and a new culture focused on winning," AOL Chairman-CEO Tim Armstrong said in the earnings statement. "We have set aggressive goals for ourselves in 2011 in pursuit of capturing the growing opportunity ahead of us."