The Armstrong Post

When Tim Armstrong arrived at AOL in March 2009, employees were ecstatic—so much so that some adorned the company’s walls with posters featuring Armstrong’s image above the word Hope, modeled after the famous campaign posters of a certain president.

Like President Obama, Armstrong’s arrival was followed by a celebrated first 100 days. The much-maligned company was ready for change it could believe in after the disastrous Randy Falco and Ron Grant era—AOL’s Bush and Cheney. “Ron and Randy were not well-liked guys,” said a former AOL staffer. “So when Tim came in, people were literally jumping up and applauding. The guy comes in; he looks like Superman. It felt like a coronation.”

But the believers’ faith has been severely tested. While many are still devoted to Armstrong and his vision, some former supporters question his readiness for the role and his ability to stick to strategy rather than reacting to changing conditions on the ground. Some have even questioned whether Armstrong really wants this job and believe that Armstrong is using AOL to paint himself as a turnaround hero—someone who should be the next CEO of giant media company X.

Last week, Armstrong made his most daring move yet, as AOL acquired The Huffington Post for $315 million, while putting founder Arianna Huffington in charge of editorial operations. It remains to be seen whether this move will become Armstrong’s Sputnik moment or his stimulus bill.

What seems clear is that this move is about Armstrong creating a new platform, and perhaps destiny, for himself, cobbled from the inchoate parts of AOL and the headliner brand of his new partner. His hope may be to create The Armstrong Post.

As soon as he began his prespinoff tour in ’09 to meet with investors and advertisers, Armstrong was preaching the new AOL mantra: content, content and content. Premium advertisers. The biggest display ad company on the Web. But questions about his commitment are in the air. When asked to grade Armstrong’s execution of his strategy, one former staffer replied, “Which one?”


Indeed, some of Armstrong’s recent moves have been puzzling. He dumped promising, very non-AOL brands like Asylum and Lemondrop, while pushing Seed—the company’s freelance-heavy, search-driven content business. In the last six months, he’s partnered with the Jonas Brothers on a teen site, hired Heidi Klum as a contributor and agreed to host Ellen DeGeneres’ site. Last month he shut down AOL FanHouse, outsourcing sports to second-tier player Sporting News.

In the midst of all these moves, he bought TechCrunch and The Huffington Post. And then there was the AOL Way, a presentation on forecasting traffic and profitability potential for each article the company produces that found its way into the hands of The Business Insider. So is AOL about premium content or cheap traffic? Is Armstrong’s strategy to build, partner or buy?

Of course, nobody thought fixing AOL was going to be easy. The company’s former cash cow, its dial-up business, has been dying a slow death for years. Its search business is tanking. The popular image of AOL’s users? That’s the way grandma goes online. Like the U.S. economy, it may be that AOL’s issues were more severe than Armstrong imagined. “I give him a ton of credit for making bold moves,” said Bryan Wiener, CEO, 360i. “But it’s possible he underestimated the huge challenge he’d face.”

Wiener lists the decline of AOL’s subscription business and the impact of ad exchanges on Advertising.com as two hindering forces. But perhaps the biggest headwind is coming from “changing market dynamics,” said Wiener. “Advertisers want to be on media properties with highly engaged audiences. Portals have drive-by customers.”