Another Search for Relevance…..It’s Now AOL’s Turn

It think there is a tipping point of sorts when a once dominant player in an industry is described as a making a bid to remain relevant. That PR kiss of death was offered by the WSJ for AOL’s latest efforts to prove that it has a place at the adult table this Thanksgiving. I have a feeling that the folks at Yahoo! breathe a sigh of relief every time they come to the realization that their continued slide into mediocrity pales in comparison to the AOL fast track to internet oblivion that has people like me asking “Oh, they ‘re still around?”.

To be fair, I was once an AOL dial up subscriber as many of us may admit (admittedly that may be the Internet’s equivalent to saying that you once had a Members Only jacket but what the heck). I occasionally come across the person who still uses an AOL email address and I wonder if they can even read email on their Commodore 64 computer (while wearing their Members Only jacket). Apparently though, AOL is still siphoning Time Warner shareholder money to try to create a portal/destination/way to get advertisers to pay them something.
Here’s what they are trying to do. They are trying to drag themselves into the modern internet era. This paragraph from the article says it so well:

“The changes are an effort to recalibrate AOL’s portal model with the way people use the internet today. In recent years web traffic has fragmented across thousands of sites and people often use multiple e-mail accounts. But AOL was rooted in an era when most Web surfers did very little actual surfing, choosing instead to stay within the confines of a single gateway (or portal), as they read the latest news headlines, checked their horoscopes, shopped and sent email”

Now, I know there are still a sizable amount of users of AOL services (all wearing their… you guessed it!) but what have they been doing all these years. It’s like people who rode bikes everywhere but were afraid to get into one of those new-fangled car things. I guess this attempt at relevance will help those folks get dragged into the 21st century. I still scratch my head at the prospect of this person and seriously question their value to advertisers.

Speaking of advertisers, it poses a real interesting situation. While online advertising spend has increased at a healthy 20% clip in Q2, AOL grew just 1.5% in the same period after four consecutive periods of ad revenue “deceleration”. AOL’s biggest issue was a 14% slump in its display ad efforts. Now, as pointed out in earlier MP posts this is an industry wide issue so it’s not fair to say that AOL is dogging it and everyone else is moving forward. What is an issue though is that AOL has to try other ways to attract advertisers. To do this they are introducing more video via a player and photo galleries. Oh, and their solution to the display advertising concern? Bigger ads! Samsung got the first crack at this highly annoying technique that makes me hate advertising even more.

As always there is more to the story. To sum up though, AOL had 111.4 million unique visitors in July in the US. Many of us would take that number in a heartbeat. Funny thing is, all the Members Only wearing execs over at AOL can’t seem to monetize this traffic. Put even more bluntly, Michael Nathanson, an analyst at Bernstein Research states, “The Street is really concerned if AOL can ever turnaround.” Enough said. I suspect you have an opinion or two so let’s hear it.