AOL's global display ad revenues grew last quarter for the first time in more than three years, an important turn for the company and a validation of CEO Tim Armstrong's bigger-is-better strategy exemplified by the super-sized Project Devil ads.
However other ad revenue categories declined, including search and contextual, ads on AOL properties, and third-party network ads. Overall advertising revenue actually fell 11 percent, or $40.6 million, during the quarter. AOL showed a net loss of $11.2 million.
Separately, AOL has partnered with Hearst Corp. to deploy its so-called Portrait display ad format on the publisher's magazine websites. The format was launched in September 2010 and previously available only on AOL sites like StyleList, Moviefone, and AOL Travel.
Procter & Gamble is the first advertiser attached, appearing in ad space on goodhousekeeping.com, marieclaire.com, redbookmag.com, and thedailygreen.com. Ads show a gallery of products: Tide Coldwater, Duracell Rechargeables, Pampers Cruisers, and a video, "Little Acts. Meaningful Impact."
As for earnings, AOL's 4 percent rise in display ad revenue was driven by domestic ad spending of $122 million, up from $109.8 million one year ago. International display ad revenue was down 46 percent.
AOL attributed a $25.9 million decline in ad network revenue to European shutdowns and de-emphasis of search campaign management and lead gen products. Likewise it tied the decline in international display ads to cutbacks in Germany and France and the 2010 sale of Bebo and ICQ.
Going forward, AOL is under pressure to prove the business value of its many investments in content, including its acquisition of Huffington Post in Q1 and continued spending on its Patch local media network. Patch has told its local journalists to recruit unpaid bloggers in their communities, a clear directive from new Editor-in-Chief Arianna Huffington. Whether the strategy will help AOL shore up page views to create a scalable network for ad sales remains to be seen.
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March 19, 2014