But other problems are still more acute, such as the 18 percent decline in its subscription business — the area that represents AOL’s legacy and it’s principle money-making operation. The big question for AOL has long been: does it have time to build a stronger display business that will eclipse the losses from dial-up subscriptions?
Given the competition, AOL is more pressed than ever, even as it sees total display gains of 15 percent. As eMarketer notes in a comparison, Yahoo’s share of the display market this year is expected to be 12.5 percent, followed closely by Google at 12.3 percent — and the search giant is quickly gaining from last year’s 9.3 percent share of the market, while Yahoo is losing ground from 2011’s 13.1 percent share. Still, the display dollars are shifting away from the portals, as Facebook is the leader, with an expected 19.5 percent share this year, up from 16 percent in 2011.
That leaves MSN and AOL to fight it out for the shrinking scraps: eMarketer projects AOL’s display share to go from 4.2 percent in 2011 to 3.9 percent in 2012. Microsoft will dip to 4.8 percent this year from 4.9 percent in 2011.
Still, AOL believes that its larger, more engaging premium ad units from its Project Devil will defy those predictions of decline, at least somewhat. AOL didn’t have many details in its Q4 release, but it did say generally that the brand campaign under Devil saw advertisers, impressions and revenue grow at double-digit rates. Hopefully, there will be a little more color on Devil during the earnings call later this morning.
In the meantime, here’s some topline figures from the release:
— Global advertising revenue was up 10 percent, its third consecutive quarter of year-over-year growth.
— 20 percent growth in third party network revenue. AOL also said it had the lowest rate of search and contextual revenue decline in approximately 3 years, due in large part to growth in search revenue on AOL.com.
— Traffic: Consumer usage was flat to Q3 2011 as growth in the Huffington Post Media Group sites offset declines at MapQuest and AIM.
— Net income was down 66 percent, though here too, the declines were showing signs of narrowing.
By David Kaplan