Armstrong Swings for the Fences

NEW YORK Like a certain president, Tim Armstrong has just completed his much-hyped first 100 days on the job. And in similar fashion, the new AOL CEO now faces the daunting task of rebuilding a troubled company.

The former Google advertising sales chief has begun laying out an ambitious agenda for AOL, the frequently troubled Internet pioneer. And while some paring down is taking place, Armstrong is swinging for the fences. His vision — which he plans to articulate starting this week to AOL’s employees and partners — is nothing short of making the company the world’s top producer of original content online, as well as its biggest provider of display-based advertising. Oh, and he wants AOL to both own Web communications and corner the nascent online local ad market.

“If you really want to break down the key strategy points, it really comes down to content, ads, local and communications,” said Armstrong.

That’s not a small undertaking and, at first glance, doesn’t seem very different from AOL’s recent three-pronged strategy of MediaGlow (content), Platform A (sales) and People Networks (social/communications). But it’s one that Armstrong believes the company is well-positioned to handle.

“AOL is not 10 people in a garage,” he said. “We have enough manpower and focus to actually do multiple things. I think we are focused on a very limited set of things than what was focused on in the past.”

So what’s going away? Essentially Bebo, last year’s much-derided $850 million acquisition. Bebo will officially be placed in AOL Ventures, a new unit that serves as a mini-incubator for AOL’s lesser acquisitions and smaller properties in search of outside investment.

The strategy of shoving Bebo together with AOL’s ever-popular AOL Instant Messenger platform never worked, Armstrong explained. However, AIM, along with ICQ, AOL Mail and other communications platforms-though never major revenue generators — remain key to the company’s future, he added.

One recent strategy AOL does not need to alter is MediaGlow, its fast-growing collection of niche content sites, many of which are staffed by professional journalists. Together, MediaGlow sites reached 75.4 million monthly unique visitors in June, up 5 percent versus last year.

Producing content that attracts users is not a problem for AOL — ad sales is, an area  Armstrong realizes he probably has to fix before anything else. Buyers complain that AOL’s sales structure isn’t clear. It’s why Armstrong brought on ex-Googler Jeff Levick in May to serve as president, global advertising and strategy, dumping former sales head Greg Coleman after three months.

“Levick is smart, and he seems to be good at process and operations,” observed Ed Montes, regional manager, Havas Digital North America. “But I’m not sure that they are clear in the market right now.”

AOL needs to be. It seems as though the previous regime had bet too heavily on the Platform A mega-ad-network model.

“The strategy when I got here was to take all of AOL’s inventory and run it through Platform A,” Armstrong said.

That works if Coca-Cola wants to blast a message all over the place, but not so much if it wants deep brand integration on specific properties, not to mention what that does to premium pricing.

As a result, “monetization has not just trailed traffic, it’s gone down,” said Armstrong. “And monetization has gone down because they’d taken it from a monetary proposition with advertisers — which was deep brand integration with slightly higher prices-to everything being priced as a network. There was fundamentally a mechanical issue in the way advertising was sold here that we’re changing for both kinds of advertisers.”