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AOL CEO Tim Armstrong: “The Model Is Disney”
It’s been roughly 100 days since Tim Armstrong was named CEO of AOL in anticipation of a spin-off/IPO of the company from corporate parent TimeWarner later this year. There are a slew of interviews out this morning in which Armstrong assesses his first 100 days, the state of the business and gives some indications of where AOL is headed.
Among the highlights:
- AOL sees content and its display ad network reach as its primary strengths
- It will have many brands built on more unified platforms that simplify the back end
- The new AOL will be divided into the following areas (per AdAge): content production, the display-ad network, local information and services, communications and AOL Ventures
- Armstrong gives mixed signals but suggests that when the Google search partnership deal is up next year, he’ll shop it to others (read: Microsoft/Bing).
- The ISP business won’t be separated from AOL after all
- Bebo is “in a very competitive space” (read: AOL paid too much, it’s struggling and must find a more effective strategy)
The following are excerpts from several of the interviews and articles that appeared this morning:
The Wall Street Journal:
AOL’s new strategy to compete in display ads has three parts, says Jeff Levick, a former Google executive whom Mr. Armstrong hired as AOL’s president of global advertising and strategy. The first is building a global self-service system that lets markers buy ads across thousands of Web sites. To accomplish this, AOL is building on a technology it introduced last fall, called BidPlace, that lets advertisers place bids to buy ads across a network of sites AOL represents as middleman. In May, that network reached 91% of the 193.8 million Americans online, according to Web-measurement firm comScore.
The system is similar to the one advertisers use to buy search ads, the largest category of digital advertising by spending. The idea is that to quickly increase display-ad revenue, AOL needs to make it easy for marketers across the globe to buy the ads, Mr. Levick says.
AOL says the second part of its ad strategy involves developing a stronger sales force that would concentrate on selling ads to major marketers on AOL’s premium Web properties, such as the AOL.com home page or its MapQuest site . . .
AOL is one of the internet’s most prolific producers of text content through some 75 properties including Asylum, the most popular men’s site, and women’s site Lemondrop.
Executives said they planned an expansion into niche areas and would boost video production.
Combined, traffic to AOL-owned MediaGlow, which houses all its content sites, rose 5 per cent in June from a year ago to 75.4m, according to comScore, and 22 of its sites ranked in the top five in their categories.
Ad Age: What does AOL stand for?
Mr. Armstrong: A safe environment, very entertaining, a great content company. As a consumer, you will see this as a company that delights you. The model is Disney. We are both buying content and producing content today. The question is how does this company become great at scaling that content and providing value to advertisers?
A: Over the years, for example, there were so many acquisitions. But, a lot of them became businesses that we were not fully committed to and we have to start making clear choices and letting the rest go.
B: Such as?
A: Well, we are going to be focused on scaling content, advertising, email, messaging and local, but making it easier and less complicated.
In the ad business, for example, we have 100 products. I think we can be much more successful with less.
And we have different publishing platforms all over the world, just as the Web has become about having centralized technology. We have been missing the core characteristic of the Internet, which is about one platform.
Can AOL have too many brands?
I would say only if they don’t work.
By having all these different brands, are you getting past that image some people have of not wanting to have anything that says AOL on it?
No, no, no. First of all, I think we have a basic philosophy here, which is the web is going to get more fragmented over time. People are going to figure out how to serve unique audiences in faster, better, more concrete informational ways and that is a strategy that fits very well with what we have been looking at with Media Glow properties and other things. Fragmentation on the internet is good for us. We believe in it and we’re riding that trend.
It’s striking that most of the pieces on AOL out today don’t talk at all about search except in the context of the potential renewal of the Google deal, even then only a couple of them mention it in passing. AOL still is a top-5 search site. The fact that Armstrong apparently didn’t bring it up himself is also interesting. Before there was “Universal Search,” there was AOL’s Full View, an innovative approach to multi-media content presentation in search that was killed by AOL managers afraid of getting ahead of the market and doing something different.
Will there be any innovation on the consumer side of search or is that totally on autopilot now? Has Armstrong decided that AOL can’t compete and grow share? No one asked.
It does sound like Armstrong has a good grasp on the strengths and weaknesses of the company overall, and is focused on some things that need to be immediately remedied. It’s interesting to me that he’s moved from a company where technology (not content) was the focus and there was a single brand to a company where content is a major area of focus across dozens of brands.
Armstrong and Yahoo’s Carol Bartz are both charged with renewing their companies and rebuilding confidence. And the two portals are similarly situated in many respects: both rely heavily on display ads and verticals. Both are “content companies” and both have similar coverage and assets. Bartz is under more scrutiny and has gotten far more attention. But Armstrong could surprise everyone and turn out to be the more successful of the two executives in the end.