AOL has created a new division to house ad sales for all its sites, ad network properties and supporting technologies. Called Platform A, the entity will integrate sales for Advertising.com, AOL-run sites, Tacoda, Third Screen Media and AdTech. The Time Warner unit has also moved its headquarters from Dulles, Virginia to Manhattan to strengthen its ties to the agency and marketer community here.
The new Platform A unit will be led by current Tacoda CEO Curt Viebranz. Viebranz will oversee an array of ad offerings that include both branding and performance-based networks and properties, a mobile network, an in-stream video ad network, a behavioral targeting technology and ad network, and a site-side ad management solution. AOL claims the total reach of all those businesses is over 90 percent of the U.S. online population. According to comScore, Advertising.com alone is the Web’s number one ad network with 87 percent coverage of U.S. consumers in May.
The realignment and move to Madison Avenue are parts of a frantic companywide effort to drive scale and profitability in AOL’s networked advertising business, which faces growing competition from other digital and traditional media conglomerates — including Yahoo, Microsoft, Google, News Corp. and WPP — in the form of aggressive acquisition and monetization strategies.
“This is all about network, scale and targeting,” Viebranz told ClickZ this morning.
By leveraging both Tacoda’s and Advertising.com’s sales forces, Viebranz said, “There’s an opportunity to sell context within AOL on the portal; there’s an opportunity to continue to buy audiences through Tacoda; and there’s also an opportunity to overlay a significant amount of additional data from the portal on what Tacoda’s doing with audiences.”
The new structure may allow Advertising.com to create the greatest efficiencies when it comes to CPM-based campaigns, according to Jupiter Research Analyst Emily Riley.
“This package-selling is attractive to brand advertisers particularly,” she said. However, she added, “The execution is probably a little more cumbersome.” That concern may be offset by AOL’s large in-house creative group, she said, which could help it streamline the distribution of integrated campaigns across the network.
Viebranz said AOL is currently sorting out how “the brand or CPM piece fits together with the CPA piece.”
“We certainly can go to an advertiser and offer a suite of products,” he said. “What does that mean for Advertising.com as a cost-per-action based network? There’s still huge growth there. There’s probably inventory we can move over there.”
Under the new structure, Advertising.com honcho Lynda Clarizio and AOL Brand Solutions head Kathy Kayse will both report to Viebranz, who, as AOL EVP and President of Platform A will report to AOL President and COO Ron Grant. The decision to place Tacoda’s chief executive in command of all of AOL’s network holdings will come as a surprise to many, since the company only recently sealed its acquisition of the behavioral targeting firm and since Advertising.com has been a consistently strong performer in the three years since AOL acquired it.
With Platform A, a challenge for AOL may lie in making sure it doesn’t mess with a good thing.
“What I have heard from Advertising.com is that so far they’ve worked relatively well with Lightningcast and Third Screen Media on the sales side,” said Jupiter’s Riley, who was previously an exec with Advertising.com. “AOL has certainly shown it understands how to keep its hands off of a successful network. I find it interesting that they would have Tacoda be the lead, as it’s so newly acquired.”
Part of the reason for Viebranz’s immediate ascension at Platform A has to do with his long history with Time Warner. In addition to spending 17 years in various roles with the company, in 1994 he became Time Warner’s first president of new media.
Also factoring into the promotion was AOL’s palpable impatience to drive advertising revenues even faster than they’ve already grown, as it continues to reel from the steady decline of its Internet access business. The company recently reported a significant slowdown in ad revenue growth, from 40 percent in Q2 2006 to just 16 percent last quarter. Time Warner CEO Dick Parsons blamed the slowdown on the passing of anniversaries for major ad deals it struck last year and on user and advertiser caution over programming and other platform changes. As a result, the company rescinded an earlier claim that its ad sales growth would exceed that of the industry at large.
“This was not preordained when we did the deal,” said Viebranz, referring to his appointment. “It became clear that they wanted to push the pace of change. They’re doing that and that’s what this thing is all about.”
AOL’s decision to make New York City the head of its operation was driven by a wish to build closer ties to the ad community on which it has staked its fortunes. “New York City is the center of advertising, so it makes perfect sense to locate our corporate headquarters here,” said chairman and CEO Randy Falco.
In a separate announcement today, AOL announced an agreement with Hewlett-Packard to offer local versions of its portal, toolbar and search product on new HP desktop and notebook computers. The pre-installed service will be co-branded.
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