AOL has been in the news a lot lately. And this week, the news wasn’t pretty despite a year’s worth of acquisitions and partnerships that are meant to strengthen AOL’s position in the marketplace. The news: AOL (NYSE: AOL) hit a new 52-Week low of $19 and announced it will lay off 20% of its staff.
So what’s going on at AOL? Turns out: a lot. Since Google alum, Tim Armstrong, took over AOL in April 2009, AOL has been making bold moves with a vision for being a premier destination of quality content. A recently leaked internal AOL document showed how AOL’s display advertising revenue was getting dwarfed by competitor Yahoo!. (Article “The AOL Way” was leaked on February 22, 2011.) The document laid out AOL’s strategy and basically admitted that they were sorely losing the portal wars for display advertising. Therefore, bold moves may be the only way for AOL to grow, gain relevancy among younger users, and start capitalizing on their investments in order to gain more ad revenue.
Here is a brief summary of some of the recent goings on at AOL:
1. AOL launched Project Devil and Pictela. Despite its satanic name (not loved by clients), Devil and Pictela are new display creative formats that attempt to bring in a level of content, interactivity and relevance to consumers without asking them to click off to another site. See http://corp.aol.com/2011/02/28/aol-s-project-devil-and-pictela-pushdown-premium-ad-formats-name/. These formats were recently heralded by the IAB as “rising stars.”
2. AOL launched PATCH – according to the New York Times, Patch “is meant to fill the void in areas where struggling local newspapers have cut back on reporting, but much of their writing and news gathering is not up to the standards of what consumers get from their traditional news sources.” Getting into the local content business appears like another bold move aimed at differentiating AOL. However, there has been a tremendous outcry that AOL is employing a sweat-shop like mentality in its handling of journalists. (See http://www.ojr.org/ojr/people/webjournalist/201011/1907/ and their Editor in Chief’s response: http://www.ojr.org/ojr/people/webjournalist/201011/1909/).
3. AOL partnered with Everyday Health so that EDH provides all health content on AOL properties. Announced in January of 2011, the partnership replaces AOL Health content with Everyday Health content. The partnership will begin on April 1, 2011. While AOL’s strategy appears to be about delivering quality content (Patch, Huffington Post, etc.) to its users, it’s clearly stepping aside in the health and wellness space. From an advertising perspective, this leaves one less viable health site to consider which may make planning deals a bit easier (since AOL health traffic was never high) though may limit negotiation leverage as one less player is vying for ad dollars.
4. AOL purchased Huffington Post – This acquisition positions Arianna Huffington to lead the newly formed The Huffington Post Media Group which will integrate all Huffington Post and AOL Content, Including News, Tech, Women, Local, Multicultural, Entertainment, Video, Community, etc. Clearly, AOL is looking to bring in a younger, more dynamic audience. (According to Comscore, 60% of AOL users are 35+).
So will all these investments pay off? Wall Street isn’t sold, while we agency planners and buyers are intrigued. AOL continues to be a publisher partner on many media plans with some very strong results. Only time will tell if this new strategy will continue to grow its user base, bring in younger demos, and help AOL shore up more ad revenue.