AOL Ad Revenues Up 26%

AOL’s ad revenues rose 26 percent last quarter, but that $81 million gain was once again not enough to offset subscriber losses on its dialup service.

Ad revenues were strong across display advertising, paid search, and Advertising.com’s performance-based network, said Dick Parsons, Time Warner’s chairman and CEO, during a conference call with investors this morning. AOL revenues dipped slightly to $2.0 million, down from $2.1 million in the year-ago quarter.

Continued efforts by the AOL ad sales team to monetize the Web properties, combined with plans to drive more traffic, should lead to sustained growth throughout this year, Parsons said. He added a renewed deal with Google will provide momentum for AOL.

In addition to increasing advertising sales, the second big push for AOL has been to convert more dialup customers to its broadband offering. AOL lost 835,000 U.S. dialup subscribers last quarter, bringing its total down to 18.6 million. Those efforts are off to a good start, according to Jeff Bewkes, Time Warner’s president and COO, but he declined to share numbers until at least next quarter, when more data will be available.

Bewkes did say more progress was made to distribute its broadband service with companies AOL has had previous relationships with, such as Time Warner and Verizon, than with partners it’s made more recent deals with.

For the quarter, AOL saw a 13 percent decrease in subscription revenues, which reflected a $195 million decline in revenue from AOL subscribers in the U.S. and a $41 million hit from changes in foreign currency exchange rates.

For Time Warner, overall revenues in the quarter rose 1 percent over the same period in 2005 to $10.5 billion, led by growth at the cable and networks segments. Earnings per share were $0.26 for the quarter, compared to $0.19 in last year’s first quarter.

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