A long time ago, there was a dominant Internet portal named America On Line, and suitors flocked to her like moths to a porch light. Though many media companies swooned over the temptress, only one was lucky enough (ahem) to marry the damsel, Time Warner Inc. (NYSE: TWX).
But the AOL/Time Warner marriage finally ended after eight tumultuous years without a prenup. And the recently separated 20-something AOL Inc. (NYSE: AOL) is trying to do what Mary Tyler Moore was so successful at -- “making it on her own.”
Can AOL rise from the ashes like a Phoenix? Or will it crash and burn again?
AOL would rather we didn’t start second-guessing or playing Monday-morning quarterback. Instead, we should be acknowledging the company’s renaissance: Having tapped Google (Nasdaq: GOOG)’s talent pool back in March, hiring away Tim Armstrong and naming him CEO, AOL has prepared for the transition from impending divorcee to eligible LLC.
Armstrong’s trying hard to make AOL relevant again. One possible step in the right direction has been to reduce the number of ads on AOL’s homepage as well as on other Websites the company owns. In Armstrong’s 100-day memo, he asserts: “On MapQuest, we removed almost 60% of the ads on some important pages, simplified the information and moved more content above the fold. Traffic went up and our revenue didn’t significantly change.”
AOL has also shifted its revenue focus to selling ads on Websites that exist separately, albeit under the AOL umbrella -- despite maintaining 6.9 million members on its main site and showing just under $1 billion in annual gross profits. One example is Media Glow Brands, which supports TMZ, Engadget,
Moviefone, and over 70 other content-specific Websites.
So AOL will continue to reinvent itself as a true media platform providing hundreds of niche products. In a recent interview, AOL’s global ad chief, Jeff Levick, said, “We want to be the world's biggest platform for display advertising. The way to do that is to open it up to all advertisers and publishers large and small.”
Casting a wide net over the Web has produced a mixed performance so far, but AOL has other projects afoot. New CEO Armstrong believes search fueled by local advertisers is a neglected industry and shows promising growth as newspapers continue to dissolve.
Two recent “search” acquisitions -- Patch, which focuses on community-specific news and information, and Going, which searches and displays local events in over 30 cities throughout the U.S. -- help round out this strategy. MapQuest also figures nicely into this mix by merging mapping and local content.
Another AOL focus will be integrating the social networking experience by unifying AIM
with ICQ and Bebo, one of the more controversial of AOL’s acquisitions, for which it paid an unimaginable $850 million last August.
AOL plans to use these personal communication affiliates to complement the rapid growth in social network advertising, a sector projected by Forrester Research to increase to $3.4 billion worldwide by 2011.
AOL’s portfolio, managed by its AOL Ventures arm, will also ramp up with investments in technologies and Internet businesses.
This could be one of the biggest comeback stories in corporate history. The pieces of the puzzle seem in place. The leadership is there. The management team appears to be coming together.
Questions arise, however: Is AOL’s brand too tarnished to be polished? Is AOL too diversified and spread too thin? Is having many adequate second- and third-tier partners, in many different spaces, a compelling enough story to propel another IPO or merger?
I’m on the fence with this one. How about you?
— Chris Poley has been a professional trader for more than 20 years.
Hi cbrown, I'm not sure how closely you looked at all of AOL's acquistions, but from standpoint, I was blown away. I thought Time Warner at some point after 2006, just left AOL on the vine to die, but they have been extremely active.
You bring up a great point, they have missed broadband train, but that doesn't mean they can't ride the 3G and 4G Air Bus.
High speed access certainly passed them by, but maybe AOL now has an opportunity to leapfrog out of dial-up to 3G and 4G/LTE wireless networks and become a leading "wireless application portal"? Ride the growing wave of smartphone adoption, GPS enabled devices, and location-based services and advertising. Having MapQuest certainly helps and their advertising engines could easily be adapted to support location-based ad/offer delivery.
Oh, you mean what satellite radio promised and quickly took away. Or premium cable TV, HBO, Showtime, etc that use our time shamelessly to plug their own commercials incessantly?
You bet I'd pay for content without distractions.........
@Chris - Yep, the problem with KoolAid is that we've been subjected to so many vendors, online and off, promising and not delivering. However, if AOL or any others come to the playground with a promise and delivery -- what a hit that would be!
It would be nice to see something offered that differs not only in look and content, but in delivery (ie not advertising based content) I'd be so bold as to say I'd even offer to pay for content without advertising. What a concept!
I hope that they will have something new and appealing to show rather than what other advertising companies such as google and yahoo are already offering. As you said their diversified presence throughout the internet may play a big part in their success. But they should be aware that the Big Ones are watching and will take action to preverve their hegemony.
Good stuff SteveGNYC, I think AOL has a chance to become a player in another sandbox. This advertising platform will work as they have such a diversified presence throughout the internet.
I'm not going to drink their Kool-aid yet...but I may pour a glass and watch it ferment. ;- >
As has been stated and agreed to - to claim onesself King of the Hill and then remain there without further development, fortification, or re-invention is just a loud ticking of a clock. In a short amount of time, this spot will be challenged, certainly by smaller foes and sometimes by larger ones. As an "early adopter" in the AOL screenname world (an account I still have and use regularly) I can only hope they are able and willing to morph into something that will keep me running through their portal for more than just email.
Right now, I'm like a thirsty kid, running into the kitchen for a glass of Kool-Aid and then running back outside to play ball, read books, listen to music, and shop. Like my mom, they must try harder to keep me inside to finish my homework.
Consider the gauntlet firmly thrown down, AOL LLC! I dare you to cross that line!! I Double dog dare ya!!!
Yeah, well, the problem with alot of companies is the fact that they think once they're on top, they have no need to do anything else. If your company is standing still, and everyone else is moving forward, you're doomed.
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
In much the same way the banks pushed back on Washington over restrictions tied to stimulus money, telecom and cable companies aren’t taking grants for rural expansion.
Let’s face it: If ever there was a perfect marriage, it’s the one between Twitter Inc. and the professional athlete, which is storming Internet and mobile phone screens at a breakneck pace.
Smarter Collaboration: How to Thrive in a Challenging Business Environment Market conditions are changing faster than ever, and organizations need to improve their agility and adaptability in order to provide better service and improve processes. The ability to work with customers, business partners, and employees as effectively as possible - while at the same time holding down costs - is a key to success. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
Mobile TV is everywhere, and yet, nowhere. Nobody uses it – because the handsets aren't good, the pricing is too high, and the coverage is not good enough. But Qualcomm's FloTV Personal TV aims to change all of that.
Ray Kurzweil's Blio and Apple's iPad tablet will make it easier than ever to have books "read" to us, says Dr. Kim, who believes that talking tablets will become interwoven into our consciousness as we "merge" with the increasingly elegant machines we hold in our hands.
Research shows that the youth of today like Facebook – but not blogging or Twitter. Does that mean Facebook has won, or just that it's not yet out of favor? Will all the services we see today fade into Ovaltine-or-Wheaties status in just a few years?
What kinds of companies are doing the most innovation in the data center? Turns out it's midtier enterprises that are taking the "Just Right" approach.
Digg
Del.icio.us
Reddit
Email This
TWEET THIS
