What happens when you emphasize third-party ad networks at the expense of premium ad sales? You get AOL's dismal fourth quarter results, says Silicon Alley Insider writer Henry Blodget. AOL last year
consolidated each of its advertising properties under Platform A, in a strategy shift signaling that ad networks would be the company's revenue driver of the future. Since then--thanks to a glut of
unsold inventory on the Web--ad network rates have fallen off a cliff.
Accordingly, so, too, have AOL's ad revenues, down 18% year over year (and, as Blodget points out, this included growth
in AOL's search business, which is eventually going to flatten out completely). Therefore, it comes as little surprise that AOL has dumped Platform A boss Lydia Clarizio in favor of Yahoo's former
display guru, Greg Coleman. The moral of the story here is that it's way more lucrative for a content site to focus on selling premium inventory, especially as ad networks grow larger and rates
continue to drop.
Overall, AOL revenue fell 23% from a year ago--depressed further by a 27% decline in subscription revenue--to $968 million. It also had a hefty operating loss of $1.9
billion thanks to a $2.2 billion non-cash charge related to acquisitions (like Bebo) that the Time Warner company overpaid for.
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