In explaining AOL’s disappointing display ad results in Q1, a surprising frank CEO Tim Armstrong offered several explanations. During Wednesday’s earnings call, Armstrong said, “we have had a display strategy that was probably off-tune.”
Armstrong later told Adweek, “The majority of our ad customers are running their display budgets off of KPIs (key performance measures like brand lift). We need to reconnect brands to KPIs. We’ve sort of needed to shift from an older display model to a newer display model, and that’s something we’re working through.”
Wait, did AOL corner the market on selling display advertising? To imply that AOL’s sales team hasn’t caught up with the market’s needs, or isn’t trained to sell in a modern fashion, is a rather stunning admission for Armstrong to make.
Did AOL in the past not actually sell display ads based on brand goals?
The online ad market continues to enjoy robust growth; eMarketer predicts that spending will surge by more than 23 percent this year. AOL’s shrinkage of 1 percent seems more of an indictment of the brand rather than attributable to an off-key sales strategy.
After all, Armstrong shook up AOL’s sales team last summer by bouncing former Google executive Jeff Levick and naming Ned Brody AOL’s new chief revenue officer. Then last December, Armstrong promoted former Miller exec Jim Norton to head of AOL sales. It’s fair to argue that this new team would be well equipped to attack the current ad market.
But maybe not. Some buyers agreed that AOL may still be stuck in selling sites and channels, not specific target audiences. “Tim’s a smart guy. I know him for a long time,” said Jeff Hinz, U.S. director of digital, MediaCom. “We’ve all been moving away from click-through rates. That metric doesn’t makes sense. That’s probably what Tim’s quotes can be attributed to. With AOL moving into digital upfronts, more video, they need to sell that in a very different fashion: ‘What is the brand’s end goal?’”
Hinz added that AOL also needs to prove its relevancy—both to brands and consumers. Lately, much of the news regarding AOL has been about activist hedge funds and fights with investors. That noise was the second excuse Armstrong offered for the rough Q1. But was that just an excuse?
It is if you are trying to send a message to the market that AOL is about building brands with quality content and high impact ad opportunities, argues Bryan Wiener, CEO of 360i. “AOL has high-reach, brand-friendly properties. Its problem is a problem of messaging. They could really use a summer of no drama.”
And how about some more high-impact ad units? Armstrong said he is urging his team to roll out more Project Devil ads, i.e. those singular, center-of-the-page magazine-esque placements the company debuted two years ago. Wiener for one, would like to see more.
But despite being in the market for a while, Devil has a few challenges. It’s still not available on all, or even most AOL properties. And not all buyers are as well-versed on the unit. When asked about Devil, Hinz said, “I’m not familiar with that.”