Display revenues were up 14 percent overall, 16 percent in the US. However search and contextual ad revenues were down 21 percent. No one is very upset about the decline in search revenues given that analysts don’t expect much from AOL in this category anymore.

AOL’s search market share has been declining over time and so it comes as little surprise that its search revenues are also disappearing.

US search market share: Google vs. AOL

In summary, the new five year deal includes:

• Search Products: Google will provide AOL with additional features and enhancement to its leading Web search products that will improve the consumer search experience across AOL’s network of sites.
• Advertising Products: Google will provide AOL with best-in-class ad formats, giving AOL consumers a better, more relevant ad experience.
• Mobile Search: As AOL renews its focus on mobile apps and content, the companies will work together to expand the alliance to cover mobile search.
• YouTube: AOL and YouTube have agreed to a content partnership that will bring AOL’s video content to YouTube. Global Focus: The alliance is international in scope and will provide improved experiences to AOL’s worldwide audience.

Tim Armstrong, AOL’s Chairman and Chief Executive Officer said:

Today is another important step in the turnaround of AOL. AOL users will be getting a better search and search ads experience from the best search company in the world – Google. After nearly a decade-long partnership in search, we’re looking forward to expanding our global relationship to mobile search and YouTube. All aspects of our partnership will be improved by this deal.

Eric Schmidt, Chairman and Chief Executive Officer of Google said:

We’re excited to deepen our partnership. This agreement combines Google’s expertise in search and advertising with AOL’s strength in online content. It’s particularly exciting to see our relationship expand into video and mobile. These areas are now at the heart of users’ online experiences and at the core of both of our businesses.

There was a time where rumors were that AOL might go with Bing.

Scrolling down the list and looking at some of those old screen shots bring back fun memories. Of course, there are many search engines missing, too many to list there or even here. But looking at the old screen captures of Google, Ask Jeeves and AltaVista reminds me of the simpler days in search.

Which was your favorite old search engine?

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 . . .

Financial Times:

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.

AdAge:

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?

BoomTown:

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.

PaidContent:

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.

The press release describes the strategy:

The new aggregation and update features delivered by Bebo go a long way toward solving the main problem facing consumers online, namely, a cluttered social networking experience with friends’ activity online scattered across the Web, living on multiple sites that require too much time and effort to access. By letting users pool key updates and information from multiple sites in one place, Bebo builds on the foundations of social networking to become the first major network to give consumers a one-stop destination from which to experience life online.

The dashboard, “one stop shop” strategy is sound and being used in a number places across the internet (MyYahoo, iGoogle, Windows Live, etc). It also makes sense for Bebo given the site’s need to differentiate from larger competitors MySpace and Facebook. However the question is: will users start to think of and use the site in this way? (Social networking +.) That’s the issue.

If Bebo does succeed in growing with this new approach it will obviously benefit Platform A ad revenues but it may also benefit AOL Search, which has displaced Yahoo (the former Bebo partner) at the top of the page:

The effort is focused chiefly on traditional brand advertisers and the top online advertisers.

Quigo has an impressive client roster of online publishers and has captured a number of publishers from Google with its technology and notion of “independence.” There were rumors that Quigo had been for sale for some time. But there was also talk at one point of an IPO. There has been no confirmation of a deal yet. However, it’s likely that the reports are true.

Stepping back, this as yet unconfirmed acquisition should be seen in the context of the ad network land grab that has included Google-DoubleClick, Microsoft-aQuantive, and Yahoo-BlueLithium and Right Media.

There are also suggestions that the build up of AOL’s advertising network and properties is in preparation for a spin off from parent TimeWarner next year.

AOL has behavioral ad technology that stores consumer’s preferences and then tailors ads based on the sites’ users’ visits. AOL is expected to announce a system that will give these users the ability to opt out of those ads.

The Wall Street Journal says AOL most likely timed this announcement to pre-empt the Federal Trade Commission meeting tomorrow on “consumer-protection issues related to online advertising.”

Some more recent related articles on Internet privacy:

• Online Marketers Joining Internet Privacy Efforts from the New York Times
• Privacy Groups Propose Do-Not-Track List from Ad Age

See also related discussion on Techmeme.

The patent, named Systems and methods for transacting business over a global communications, was granted in 2005, and covers actives such as “video games, electronic board games, crossword puzzles or other word games, sports betting, card games, or any other activity or combination of activities,” InformationWeek reports. The patent holder feels it also covers the bidding methodologies deployed at Google AdWords, AOL Search Marketplace, Microsoft adCenter, and Yahoo Search Marketing.

From the press release:

The new entity, called Platform A, will offer advertisers access to the most sophisticated targeting and measurement tools available in the marketplace across Platform A’s unmatched network of third-party sites, as well as AOL’s owned and operated sites. Platform A already reaches more than 90% of the domestic online audience, according to comScore Media Metrix. Platform A builds on the success of Advertising.com, which operates the largest third-party display network, and integrates behavioral targeting leader TACODA, Third Screen Media, which operates the largest mobile media network, market leading video ad serving platform Lightningcast, and ADTECH’s global ad serving platform.

Simultaneously, AOL has stuck a deal with HP to offer co-branded local portals (like others such as Google-Dell and Microsoft-Lenovo): AOL separately announced today that it has signed an agreement with HP to offer co-branded, localized versions of its portal, toolbar and search on HP desktop and notebook PCs sold worldwide. Under the agreement, the co-branded portal will be set as the default homepage, and the co-branded toolbar and search will be default settings in various countries worldwide. The agreement extends and expands the existing relationship between HP and AOL, which provides consumers with a co-branded AOL/HP portal as the default homepage for HP consumer PCs sold in the U.S.