AOL Ad Revenues Grow by 5%, But Domestic Display Falls

  |  May 9, 2012   |  Comments

Company stresses video and rich media ad offerings amid disappointing U.S. ad growth.

AOL's ad revenues are slowly ticking back up, rising 5 percent from $313 million in Q1 2011 to $330 million in Q1 2012. However, much of that growth did not happen in the U.S. market or on AOL properties.

The company's domestic display revenues, for example, fell 1 percent to $119 million while its international display ad business brought in $11.4 million - an increase of 34 percent over the first quarter of 2011. Display ad dollars from the U.K. and Canada buoyed those international revenues.

"I was not happy with the domestic display over the course of Q1," said AOL CEO Tim Armstrong during this morning's call with investors. "We had sort of a stale strategy that was probably off tune a little bit and we've tuned it back up.... It's much more KPI focused," he added, noting he has spent lots of time in recent weeks meeting with advertiser clients and agencies to promote AOL's new data- and ROI-centric display ad sales focus.

The company said its domestic display numbers were down in part as a result of a decrease in sales of reserved impressions. Execs referred to a particular advertiser that suspended ad buying.

"We fully expect display to recover this year," said Armstrong.

Revenues from AOL's third-party Advertising.com network were up 23 percent, but ad revenues from AOL properties fell 2 percent. The company was heartened that its search ad revenues were down only 6 percent; they fell 21 percent in Q1 of last year.

The firm is betting on rich media and video advertising as key to future revenue growth. Armstrong said use of its large Project Devil rich media ad unit grew 80 percent year-over-year and CPMs rose. "Devil worked. Our customers want it and we'll continue to scale it," said Armstrong.

AOL also served more than 1 billion video ad impressions resulting in 100 percent video ad revenue growth year-over-year, said Armstrong.

The firm has been beefing up its video content. In April it launched its AOL On video hub aimed at generating segmented video audiences for advertisers. A live Huffington Post streaming video network is also in the works.

"We see significant gaps in the video marketplace that we plan on being aggressive about," said Armstrong.

More and more people are watching video via mobile devices, and the company sees the two as intertwined. "One of the reasons we invested so heavily in video is video is mobile," said Armstrong. "We have a number of different investments in mobile advertising."

AOL's total revenue dropped 4 percent to $529 million in Q1 2012 from $551 million during the same period in 2011.

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Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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