Posted September 10, 2008 9:47 am by with 7 comments

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AOLIt 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.

  • We’ll see where that effort will get them. I’ve personally lost all hope on them, they were supposed to keep up, or even better, be the leaders with the web changes.

  • Jack

    Actually, you left off 100 million. You may want to fix your typo. AOL had 111.4 million in July, which is not bad since the middle of the summer is a slow time on the internet.

    Also, you did not include the complete quote by Bernstein Research:
    “The Street is really concerned if AOL can ever turn around. For the past year, we have been hearing about how traffic is not the problem, monetization is. I don’t need to be convinced that traffic can return. I just want to understand how they can convert that traffic to advertising growth.”

    Remember, the largest display ad network – Platform-A – is only 1 year old. A little patience.

  • Brad Hill

    I believe you might be confusing two different parts of the business: Internet access and online publishing/advertising. Structurally, the two have been formally separated. So while the relatively unchanging aspects of the access business (dial-up slowness; legacy users) can inspire facile insults (“Are they still around?”), the publishing and advertising business is a whole other story. In that story, user engagement is increasing at a rapid pace, and there is handsome profitability in many areas. New products are introduced frequently, and many owned-and-operated, stand-alone brands (Engadget, Stylelist, TMZ, Asylum, Spinner, Joystiq, Autoblog, WalletPop, etc.) enjoy best-of-breed reputations, dominant usage metrics, and blue-chip standing in their niches. I personally think the new is pretty cool. And remember — while it is the flagship, is still one product in a large and expanding portfolio of online destinations.

    AOL is a more complex business than many observers realize. Simplifications might be tempting, but inevitably lead to incomplete arguments. Here in the trenches we have a dynamic sense of purpose, a satisfying feeling of accomplishment, and are continually looking ahead to new milestones.

    Brad Hill
    Director, Weblogs Inc. (AOL)

  • Typo fixed. Thanks for the catch, Jack. As for the complete quote it only further shows the concern that any analyst would have because if you can’t monetize it then what is it really doing?

    Brad, glad to hear you are passionate about your work at AOL. It’s that kind of enthusiasm and concern that could be the way out of the current perception / reality of AOL being Time Warner’s albatross.

    Frank Reed’s last blog post..ChannelAdvisor – SSDD?

  • lets see what AOL have for the users…….

    SEO forums’s last blog post..How to increase the speed of search in MySQl database ?

  • I spent a couple of years doing online marketing at a Time Warner cable franchise in the Midwest, and was there when the AOL/TW merger happened.

    What a disaster. The funniest part (only in retrospect, it was HELL when they did it) was when they insisted on the whole AOL/TW empire using AOL for email. Not that they rolled out a business interface, or anything like that … nope, we all used the consumer version with a “dongle” for security.

    That debacle lasted about six months, during which time practically the whole company started using Yahoo & GMail addresses instead so we could get some work done.

    AOL has been looking for a reason to exist for several years, and they haven’t found it yet.

    Ami Ohayon’s last blog post..From Jerusalem to Boston

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