AOL Sees Ad Gains, Pushes ‘Project Devil’ Inside Agencies

AOL’s global display ad revenue grew 15 percent in Q4 2011, driven by growth in both the U.S. and overseas and special strength in the ad network business. Additional factors were changes to the sales organization, tech enhancements, and strength in mobile and video demand. AOL says its video views, video ad impressions, and revenue grew at double-digit rates last quarter over the same period in 2010.

On a call with journalists, Armstrong placed AOL in a small group of online giants, including Google and Facebook, that have lately gained share in the display ad market. The unmentioned loser here is Yahoo, whose display ad share fell to 11 percent in 2011, according to comScore. But that’s still far more than AOL’s approximately 2.7 percent share.

The news on search and contextual ads was not as good, as revenue from those sources fell 8 percent. Execs sought to put a positive spin on that figure, noting it’s the lowest rate of decline suffered in about three years.

Armstrong also spoke about some recent ad technology projects. He said AOL is building a system that will let agency holding companies build its Project Devil ads in-house. The ads in question are large format units, based on tech acquired with Pictela in 2010. They are designed to accommodate a range of content types and interactivity.

“We believe most clients could extend the amount of content they run in advertising,” said Armstrong. “The system we have been working on is an enterprise system that could go inside the holding companies. We’re taking our software and user interface and white labeling it.”

Additionally, Armstrong said a new self-service ad product for AOL’s Patch family of local news sites has gained traction. Launched in Q4, it has already added 500 customers, he said.

A few other earnings tidbits:

  • Revenue from AOL-owned properties grew 6 percent, from $245 million to $259 million.
  • AOL’s total ad revenue ($364 million) is now almost twice what it makes from its subscriptions and access business ($195 million).
  • Third-party network revenue grew $17.8 million, thanks to 10 percent growth in the Advertising.com business and $9.4 million related to the January 2011 acquisition of goviral.
  • AOL’s audience growth was sequentially flat as momentum in Huffington Post Media Group sites was offset by traffic declines at MapQuest and AIM.

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