Home Online Advertising AOL Executive Shuffle Reflects Tightened Ad Network Focus

AOL Executive Shuffle Reflects Tightened Ad Network Focus

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aol advertisingDespite AOL’s efforts to build up its owned & operated sites, including the Huffington Post Media Group its local content offering Patch, the portal’s real growth has always come from its Advertising.com ad network. So it wasn’t too much of a surprise when AOL announced a few executive shifts that are designed to highlight the importance of that business.

First, Ned Brody, who was given oversight over all advertising as chief revenue officer in December, will now concentrate strictly on Advertising.com as CEO of that group. In addition, AOL’s SVP and head of ad sales, Jim Norton will remain in that role, however, instead of reporting to Brody, he will report directly to AOL CEO Tim Armstrong and become a part of the company’s executive committee. Lastly, Janet Balis is moving over from her post as head of sales strategy to become publisher of the Huffington Post Media Group, reporting to Arianna Huffington.

“The Ad.com growth has been extraordinary,” Brody told AdExchanger, when asked about Q1’s flat revenue in general display, in contrast with third party network dollars gained $20.8 million, reflecting 14 percent growth in Ad.com. “A year-and-a-half ago, [Ad.com] was managed from a product perspective. We’d been managing it as product team with a sales force that was horizontal across all products.” Now, instead of selling ads for Ad.com through other parts of the company, the unit will have a “specialist team” in place, in addition to a dedicated sales force, which will work with the national sales team in the hopes of streamlining the sales process.

The fairly stable track record of growth of the Ad.com Group, which includes seven other brands aside from the flagship network, Advertising.com Sponsored Listings (ASL), ADTECH, Pictela, AOL Video (the umbrella over 5min Media and goviral) and StudioNow, suggests that AOL needs to bring some of that growth to the  O&O sites and to its Project Devil, which stresses more interactive and creative display ads for the AOL content and outside parties. The Devil ads, the formation of which emerged out of AOL’s acquisition of Pictela two years ago,  have also embraced the network model, Brody noted.

“We continue to be incredibly enthusiastic about Project Devil,” he said. “The latest development is Pictela Enterprise, and the ability of marketers to have a pipeline to manage their premium campaigns. Also, the Devil Network was launched, which goes beyond AOL’s O&O sites.”

Part of the reason for the imbalance between the third party network revenue and AOL’s general display efforts, is the view of advertisers that the web remains a direct response medium versus a branding medium. With Pictela and Devil, AOL has tried to position itself as providing equal parts of both DR and “premium branding” opportunities.

In a larger sense, the display market, which eMarketer projects to grow 24.1 percent to $15.3 billion this year, is changing.

In 2012, AOL’s share of US online ad revenues is declining. The company’s share of online ad revenues in the U.S. fell to 2.8 percent in 2011, down from 3.4 percent the year before, eMarketer has said. While the 2012 online ad marketplace is projected to gain 23.3 percent with $39.5 billion, AOL’s share of revenues will fall further to 2.4 percent, eMarketer estimated, as Google and Facebook take a larger piece of the display pie.

That’s not a situation that an executive change can alter. All AOL can do is play to its strength and continue to streamline the process of its ad sales, which is why Nortan and Balis were moved as well.

In any case, AOL is not without hope. As Macquarie Capital analyst Ben Schachter said last month, AOL sold a slightly higher share of the Devil ad units (27 percent of days) vs. the year-ago period (26 percent of days), so the expansion of Devil into environments that better reflect online’s strength, particularly the Devil network ads, could improve that picture. Schachter  also pointed to a “substantial” drop in the proportion of pure (i.e., lower CPM) direct response-focused advertisers on the homepage compared to the year before (28 percent vs. 43 percent).

Still, given expectations of more of Q1’s performance in Q2, AOL is not likely to see the results of the latest executive shuffling until later this year.

By David Kaplan

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