• by Laurie Sullivan , February 8, 2011

AOL plans to focus more on video during the next year, expanding into Asia with products and offerings after setting up the infrastructure in the U.S. The company has high-definition studios in New York and California and recently bought a company supporting a network of videographers to provide production, distribution and monetization of content, according to AOL CEO Tim Armstrong, speaking at the Signal L.A. conference in Los Angeles Tuesday.

Armstrong and Arianna Huffington, AOL president and editor in chief for the newly created Huffington Post Media Group, provided insight into the $315 million deal announced Monday. Federated Media Executive Chairman John Battelle led the discussion.

Some reports suggest that the political content attracted AOL, but Armstrong calls that theory "a red herring" because 85% of content or traffic on HP doesn't have anything to do with politics. "Our interest in buying the Huffington Post was about the social content and the future in distribution and, frankly, Arianna's TLC around the content space," Armstrong said.

It comes down to price, strategy, execution and lots of content, he said. The next 30 days will determine the future. Within 45 days, Armstrong plans to have the integration complete, along with a vision on editorial direction.

Citing AOL numbers, Macquarie Securities Analyst Ben Schachter wrote in a research note that the Huffington Post is on track to generate about $50 million in revenue and $10 million in OBIDA this year, up to about $100 million in revenue next year.

AOL will build a company for the next version of the Internet, Armstrong said, calling Huffington Post one of the fastest-growing properties on the Web. The company has been creating a broader canvas on which advertisers can paint a message. Project Devil was created after AOL began measuring pages on the screen to determine the amount of space devoted to content and ads, Armstrong explains.

Between 18% and 30% of the page above the fold supports content, mainly because the Internet was designed 15 years ago and people just kept sticking more things on pages. Project Devil doesn't use more space on the page, but rather combines ads, marketing and editorial content.

Project Devil, an ad and content strategy, rolled out across all AOL properties with between 80% and 90% of the original companies that advertise across the sites. Approximately 50% have multiple brands. Prior to the redesign, the brands experienced an average 22 seconds interaction per ad per user, compared with an average of 40 seconds per page per user for the redesigned pages. Armstrong said it comes down to the cost per engagement for less noise, bigger placement, cleaner pages and more engagement.

AOL's ad sales team takes over all sales of Huffington Post; a very few will not make the transition to the new company, according to Huffington.

Aside from ad units, AOL will soon release a digital magazine. Competing with Rupert Murdoch's "The Daily" for the iPad, AOL will launch "Editions," aimed at tablets. When asked for an opinion on the name "The Daily," Huffington said it seemed "strange" to call an Internet newspaper "The Daily" -- since it's not daily, but real-time "immediacy."