AOL: More Eyeballs, Less Money
by Peter Kafka
Posted on November 13, 2008 at 6:58 AM PT
AOL’s PR team passes along a note this morning trumpeting big increases in October traffic.
Here’s a taste:
AOL programming sites hit all-time high traffic numbers and marked the 21st month of consecutive year-over-year growth for unique visitors, according to the October 2008 comScore Media Metrix report. Unique visitors to AOL’s programming content sites grew 7% year-over-year to 54.3 million in October, and page views more than doubled, up 101% year-over-year to 4.2 billion. Engagement (total minutes) grew 51% year-over-year in October. Total minutes reached an all-time high on AOL.com, growing 27% year-over-year. Additionally, AOL.com page views grew 27%, and unique visitors and total visitors were up 9%, year-over-year, as the site further opened up to third-party content, services and features….”
Etc. In the old days, like last spring, this kind of AOL boasting would make competitors at Yahoo (YHOO) quiver with anger, because the Yahoo guys thought that the AOL guys were using legal but sneaky tricks to inflate traffic. Now it’s hard to imagine anyone at Yahoo getting too amped about this stuff, mostly because the people who were most passionate have left.
In any case, the real issue for AOL isn’t traffic. It’s how much that traffic is worth. And those numbers are not so good.
Barclay’s Doug Anmuth, who is covering AOL parent company Time Warner (TWX), sends out his own note this morning, which points out that while AOL’s page views increased 14 percent during the last quarter, overall ad revenue dropped six percent, and display ads at AOL’s own sites dropped 15.4 percent.
His conclusion? “Monetization of non-guaranteed inventory and challenges around Platform A continue to be an issue.” Translation: Doesn’t matter how much traffic you have, if you can’t sell it.
And those problems aren’t going away. Anmuth projects that AOL ad revenue will drop another 4.4 percent in 2009. That’s a projection some might find optimistic.
[Image Credit: Laffy4k]
Comments
What probably caused AOL’s traffic spike in October is the fact that they planned to shutdown their AOL Hometown personal websites at the end of October. Everybody was logging in to download their sites.
Unfortunately, not everyone got the note from AOL that they were closing the personal websites at the end of October and have lost their work.
Posted by Tim Anderson at November 13th, 2008 at 7:20 amGood point Tim.
All the traffic doesn’t mean anything if it can’t be monetized. This past article brings up some potential issues that may continue to spell problems for both AOL and their Platform A.
From SeekingAlpha
June 18, 2008
“Back in September, AOL (TWX) today announced a series of changes it was making to position the company as the world’s largest and most effective advertising network, building on its industry-leading Advertising.com network and the recent acquisitions of TACODA, Third Screen Media, Lightningcast, Adtech, Quigo and Bebo, collectively purchased for what must be close to $2 billion dollars. The realignment marked the final stage in AOL’s transition from an access business to a global, ad-supported Web company.
The new entity, called Platform A, says it is offering 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 is said to already reach 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.
In recent weeks, the company announced plans deploy Tacoda’s technology across the whole Platform A network. In an article written by Fred Aun published at Clickz.com titled “AOL’s Platform A Integrates Tacoda Across Network” Platform A President Lynda Clarizio, said players in the online ad industry are now insisting on scale and precision with consumer targeting options. She said the use of Tacoda’s BT technology will help Platform A satisfy that demand.
“We’ll replace all of Advertising.com’s existing behavioral technology with Tacoda’s behavioral product,” said Clarizio. For re-targeting campaigns, Platform A will continue using Advertising.com Advertiser Leadback technology and migrate Tacoda Encore clients to the Advertiser Leadback platform, she explained. Clarizio said the integration gives Tacoda the full benefit of reaching all of Platform A’s 180 million unique visitors, representing 91 percent of the U.S. Internet audience. She said she considers Tacoda to be the industry’s best behavioral targeting technology. I guess that makes sense, they did pay David Morgan and his team $275 million after all for it.
It all sounds great doesn’t it? Ah yes, but Ms. Clarizio failed to mention a potential large problem that could literally prove to be a show stopper. Tacoda is being sued for patent infringement by a company who appears to be the rightful owner of the “patented” technology she herself refers to as “the industry’s best behavioral targeting technology”.
That’s right! It appears Tacoda, said to be acquired solely for their technology and not their people, owns not a single issued patent on the technology they sold to AOL! They must have seen the value in patenting it since it is “patent pending” but you obviously can’t obtain a patent for technology someone else patented many years ago. This ‘already patented” technology is the exact same technology that they intend to make a cornerstone of Platform A, allowing them to monetize AOL’s $2 billion dollar plus investment. I know, say it isn’t so!
It get’s even better, according to Modavox’s (MDVX.OB) just released filings, they just sent a Cease and Desist letter to AOL, LLC President & Chief Operating Officer regarding Ms. Clarizio’s exact stated plans to utilize Tacoda across all of Platform A.
On May 16, 2008, Modavox served a Cease and Desist letter to the AOL, LLC President & Chief Operating Officer. We advised of the possible expansion of our current action against Tacoda to include AOL, LLC if they intend to utilize the Tacoda Advertising process throughout the AOL, LLC “Platform A” as described in recent publications and news releases. We have informed AOL, LLC that a non-exclusive license to the patents-in-suit are available; however in the absence of a license AOL, LLC’s published intention to make the Tacoda solution available across the Platform-A Network will in fact infringe upon well identified patents. As of June 1, 2008, the matter remains unresolved.
So I ask a couple very simple questions of Ms. Clarizio and Mr. Falco. In light of the importance of Platform A to AOL’s future, the fact that at least a couple billion dollars has likely been spent in it’s formation, the fact there have been suggestions it will be spun off into it’s own publicly traded company, and the fact Platform A is clearly predicated and reliant on Tacoda’s behavioral targeting technology to monetize your audiences through online advertising, what if you lose this lawsuit? What if one of your competitors buys this small company and leverages it against you?
Until this important issue is resolved, it appears AOL’s Platform A may not make the grade.”
Posted by tim dell at November 13th, 2008 at 11:06 am