AOL Stomachs Dismal Quarter

Like President Barack Obama, AOL chairman and CEO Tim Armstrong is finding out that change hasn’t happened quite as swiftly as he might have expected, despite the hype and optimism surrounding his arrival on the job.

AOL’s advertising revenue plunged 27 percent in third quarter compared to the same period in 2009, while display advertising slipped by 14 percent globally and 8 percent in the U.S. That marks the third straight quarter that AOL’s display business has trended southward even as the overall display ad industry enjoys a solid recovery in 2010.

U.S. display advertising revenue landed at $112.5 million, down from $121.8 million in Q3 2009. While display revenue slipped, search and contextual advertising also exhibited a steep decline of 28 percent, netting out at $99.2 million. Ad revenue garnered from AOL’s third-party network dropped 41 percent to $72.8 million.

On the bright side, AOL’s revenue numbers were generally in line with analyst expectations, and its costs were lower than anticipated. Execs were also touting momentum gained from the company’s ambitious initiative and recent acquisitions. AOL recently overhauled its core property, adding several new brand friendly Web series. In addition, the cash rich company recently snatched up TechCrunch, 5 Minutes Ltd. and Thing Labs, Inc., for a total of $97.1 million up front and potentially another $23.1 million over the next three years.

“AOL is working hard to redefine the consumer experience on the Internet,” said Armstrong in a statement. “In Q3, AOL continued on the path towards better health through targeted acquisitions and smart dispositions; meaningful product improvements; site relaunches; and strategic partnerships, all of which will enable us to execute more quickly against our strategy.”

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