AOL Ad Revenues Way Down

  |  November 4, 2009   |  Comments

Both display and search ad revenues dropped during what is likely to be the last full quarter that AOL is part of Time Warner.

In what is likely to be its last full quarter as a unit of Time Warner, AOL reported an 18-percent year-over-year drop in advertising revenue, down to $415 million from $507 million in the third quarter of 2008. Ads on AOL's own sites, including both display and search ads, dropped 21 percent to $288 million, while revenue from third-party ads sold through its network dipped 12 percent to $127 million.

The pace of ad revenue losses is slowing, at least. AOL reported a 21-percent year-over-year loss in the previous quarter, but search revenue took a bigger hit this quarter than last.

Paid search revenue from AOL's deal with Google dropped by 24 percent during the third quarter, primarily due to lower query volume and lower clickthrough rates on the AOL client, according to Time Warner CFO John Martin.

In addition, Martin laid some of the blame for revenue declines at Google's feet, saying the cost-per-click advertisers pay for ads showing on AOL's site were down due to algorithmic changes by Google.

Overall revenues for AOL, which include $332 million in subscription fees, were down 23 percent over the same period last year, to $777 million.

Time Warner is still on track to complete the spin-off of AOL before the end of the year, Time Warner CEO Jeff Bewkes said. When asked about the post-spinoff prospects of AOL in a tough market, Bewkes expressed optimism.

"AOL has a lot of scale, and some very successful consumer products inside the AOL experience," Bewkes said. Some of the core strengths that AOL will focus on include Web content, communications tools, and ad monetization, he said.

Those three areas of focus are not new, as AOL has been working toward them for the past year or two -- especially since Tim Armstrong was named CEO in March and the spin-off from Time Warner was approved in May.

AOL has been building out its content properties lately, and pursuing a local content initiative with its Patch.com network of local news sites that AOL acquired in June.

AOL will also have the cash flow from its leftover subscriber business, which brought in $332 million during the third quarter. In addition, Time Warner will not be saddling AOL with debt during the spinoff, so it will enter independence in a position to succeed, Martin said.

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Oct 3 to take advantage of Early Bird Rates!

ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

IBM: Social Analytics - The Science Behind Social Media Marketing

IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.

An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising

An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising
If you're considering implementing a marketing attribution model to measure and optimize your programs, this paper is a great introduction. It also includes real-life tips from marketers who have successfully implemented attribution in their organizations.

Jobs

    • Tier 1 Support Specialist
      Tier 1 Support Specialist (Agora Inc.) - BaltimoreThis position requires a highly motivated and multifaceted individual to contribute to and be...
    • Recent Grads: Customer Service Representative
      Recent Grads: Customer Service Representative (Agora Financial) - BaltimoreAgora Financial, one of the nation's largest independent publishers...
    • Managing Editor
      Managing Editor (Common Sense Publishing) - BaltimoreWE’RE HIRING: WE NEED AN AMAZING EDITOR TO POLISH WORLD-CLASS CONTENT   The Palm...