AOL Eschews Banners, Leans Into Native

Armstrong pushing marketing solutions to avoid commoditization

A few months ago, Federated Media announced it was shuttering its direct ad sales practice and essentially pushing banner-selling into the realm of machines to focus on native advertising. The move got many in the online publishing world fired up—debating whether this was an isolated incident or the start of a sea change.

AOL isn’t going as far as Federated did, but the company definitely seems to want to get out of the expensive-guys-in-suits-selling-banners business. According to CEO Tim Armstrong, AOL’s biggest focus these days is its Marketing Services group, which among other things houses its native ad-type offerings.

“We’re getting out of straight banner solutions business,” Armstrong said in an interview with Adweek. “That’s getting very commoditized. So we’re making giant gains in marketing services. Big integrated online/offline programs. That’s our future.”

That future will include helping brands crank out content in real time using AOL’s strong editorial team and programming skill—something Armstrong and company emphasized when meeting with agencies last month at CES. “That’s one thing that got people really excited about," Armstrong said. "Advertising has never been about real time and live. We can do this because we know publishing."

There’s probably a reason AOL is leaning hard into native and real time ads. While its ad network business exhibited impressive growth during today’s Q4 earnings announcement, momentum from display ads and AOL’s owned-and-operated brands was less than promising: domestic display revenue actually slipped 3 percent. while revenue for AOL’s Brand Group rose just 4 percent. Per eMarketer, AOL saw its overall share of the display ad market fall to just 3.6 percent in 2012,  down from 4.3 percent in 2011. The company needs to move away from selling customized banner packages.

Those packages are not going away of course. But they probably won’t be sold by humans. Per Armstrong, AOL plans to push more display ads into programmatic selling mechanisms, including premium inventory.

“When you look at the future of the online ad business, you see two things," he said. "Machine-to-machine trading is growing, and that can be premium. And we’ve made a big investment there. That’s a mega trend for the ad business. And the future is about non-commoditized inventory like [Project] Devil ads and video."

Among the other earnings highlights Armstrong touched on:

-AOL is focusing on delivering more agencies white-label technology, presumably to get more of them using tools like AOL’s ad serving platform and Project Devil ad treatments.

-200 publishers are now employing AOL’s Project Devil ads.

-There are now 30,000 publishers in AOL’s video syndication network, and the number of campaigns run through this network have increased 300 recent over the past year.

-During Q3 and Q4 of last year, the number of cross-media campaigns that included mobile surged by 400 percent.

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