AOL to Think Locally After Spin-Off

  |  December 10, 2009   |  Comments

On eve of split with Time Warmer, CEO Armstrong details how AOL will contend with the likes of CitySearch, Yelp, and Google.

AOL will take back its maiden name from Time Warner this morning when AOL execs ceremonially ring the opening bell in the New York Stock Exchange. The company's spin-off will end a 10-year nightmarish marriage between the two companies.

But investors will be watching closely as the troubled Internet pioneer attempts to reinvent its brand and products while navigating a diminishing dial-up subscription market. CEO Tim Armstrong suggested yesterday that gaining share in the increasingly competitive local Web advertising niche is key to its future viability.

Speaking at the UBS investor conference in New York, Armstrong took a few moments to detail how AOL will spar in a space occupied by CitySearch, Yelp, and Google. He pointed to a 17-town test AOL is running that will be expanded to around 30 cities by month's end.

The initiative -- which he characterized as "digitizing towns" -- will grow to 100 municipalities in 2010, Armstrong said. Providing a turn-key platform where schools, government departments, local businesses, and classified listings firms can create or update Web sites will be at the heart of the effort.

"We see local as a big white space," the former Google executive explained. "And what you find is that [local organizations] typically don't keep those Web sites up-to-date. But, if there's a singular platform where you can update everything...It can be a very successful model."

More generally, Armstrong said that AOL will launch a new ad platform in 2010 that utilizes application program interfaces (APIs). The system will apparently make it easier for marketers to manage campaigns on its platform by letting team members pass data back and forth.

Adam Kasper, SVP and director of digital for Boston-based Media Contacts, said the API offering is critical. "AOL realizes they need to do this in order to play competitively in the ad network arena," he said. "You can't really fault the new regime for being behind the curve, and it appears they are making many good moves to get the offering up to par. They are, however, going to have to accelerate the 'catch up' process as they risk falling behind again...Google and Yahoo are certainly not slowing down to wait for them."

AOL is counting on original content to remake both its graying brand image and business model. The company has dramatically increased both in-house and freelance writing staffs. It has also announced plans to launch a new content management system that will assign stories based on hot topics and ad pricing data.

Additionally, Armstrong said the number of videos on AOL sites grew by a factor of six in the last half-year, and that MapQuest -- despite losing considerable traffic to Google Maps -- is still "one of the most valuable properties on the Internet."

AOL's stock price will be under close scrutiny tomorrow as investors express their confidence in Armstrong's ability to rebuild the Sterling, VA-based company. Analysts from the New York-based investment firm Broadpoint.Gleacher set a price target of $24.29 per share before the NYSE opened today.

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ABOUT THE AUTHOR

Christopher Heine

Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.

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