AOL’s reliance on display ads
AOL’s net profit has fallen sharply in the last three months, but an increase in display ad revenue is pointing to a recovery, the firm has said.
AOL display ad revenue up as profits plunge 86%
Thursday, May 5 2011 by John Burns
Businesses using display ads to get a high website ranking will be critical to AOL’s recovery. The firm has posted a net profit of $4.7 million (£2.9 million) for the first three months of 2011, down 86 per cent on the previous quarter.
However, AOL, which paid $315 (£191.5 million) for the Huffington Post website in March, is confident that an increase in display ad spending will see its fortunes turnaround. Although search and contextual ad revenue fell 21 per cent, earnings from display ads rose four per cent to $130.5 million (£79.3 million).
In the US, display advertising increased 11 per cent to $122 million (£74.2 million), helped by the acquisition of the Huffington Post and technology blog TechCrunch. Excluding acquisitions, this figure drops to six per cent.
“Today represents an important milestone in the turnaround of AOL as global display revenue grew for the first time since Q4 2007,” said Tim Armstrong, chairman and chief executive officer. “I am proud of the work completed thus far and we remain focused on accelerating our momentum through continued execution of our strategy to become the premier digital content company.”
AOL grew video viewers rapidly moving into second position in comScore in March, the firm said. In addition, most AOL properties were redesigned to accommodate the Project Devil advertising format, which won an Interactive Advertising Bureau Rising Star award along with Pictela.
Last week, AOL released new research on online content and social media. The study, the company said, indicates that content is “the fuel of the social web”, with 27 million pieces of content shared daily. It also found that nearly one-quarter of all social media messages contain links to content.
John Burke, senior vice-president for global sales strategy at AOL, said: “The research findings further validate our strategy and focus on creating high-quality, original content.”
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