Tuesday, October 23, 2007

On the 'latest' (2007 - 2008) future of AOL...A portal no more

While the Falco strategy of building out a full fledge advertising network ('a la Platform 'A') and abandoning the notion of being a portal play, might have wings for the next 6 months, one still has to realize that online and other media channels are still incredibly fragmented, which means advertisers trying to optimize their ad spends will still have a hell of a time trying to figure out where to buy.

Wireless, cable, broadcast, TiVo, news print (yes, I said it - still a viable spend), outdoor/transportation, radio, the bellys of pregnant women, the options for reaching eyeballs is ever increasing and just because you seek to amass broadbased inventory online alongside user generated content and a funky margin mix with ad network affiliates, this strategy will not guarantee success. Besides does anyone remember what happens to advertising when a recession hits!?! The cliche’ “Don’t put all of your eggs in one basket” comes to mind.

1 comment:

Digital Media Mobster said...

Update on AOL's Platform A strategy in today's Wall Street Journal reads as follows...

Quigo Purchase Completes Strategy Shift for AOL

AOL on Wednesday completed the final piece in an ad network puzzle totaling $1 billion worth of acquisitions. The Time Warner company on Wednesday acquired Israel-based Quigo for an estimated $340 million, according to The Wall Street Journal, furthering its shift from a dial-up Internet service provider to an advertising services company. Quigo, a search and contextual advertising firm, is the fourth company AOL has bought this year and the third ad network. Mobile advertising firm Third Screen media and the behavioral targeting firm Tacoda are the other two.

Clearly, AOL's strategy is to become a giant digital advertising network. It's unclear whether the company's content business will slowly fall by the wayside or simply become another business unit, but the Web portal strategy is no longer its main goal. Its plan is to sell advertising on its own sites as well as those within its growing network, which is called Platform A. Quigo, Tacoda, Third Screen Media and Advertising.com are all being molded into the ad platform, which reaches 94 percent of the total U.S. online audience, according to comScore Media Metrix.

AOL has a lot to prove: the company's ad revenue grew just 13 percent in the last quarter, compared to a 38 percent drop in revenues from its lucrative but declining subscription business. However, the new strategy, which is only just underway, has yet to affect AOL's bottom line.
Read the whole story on WSJ.com