Home Publishers AOL Is Reaping The Rewards Of Programmatic

AOL Is Reaping The Rewards Of Programmatic

SHARE:

AOL quote“Programmatic ads grew at over 100% year-over-year, and we’re growing faster than the programmatic field overall,” AOL CEO Tim Armstrong told investors looking over the company’s second-quarter results. “Programmatic [ad revenue] has grown from 5% to 34% of our business in a year, which is part of a large industry shift and the biggest shift in the business in the past twenty years,” he said.

Besides programmatic, better inventory pricing and video helped propel AOL’s advertising higher. Display was up 9% year-over-year, search was up 6%. AOL’s third-party platforms business, which includes AOL One, Adap.tv, Ad.com, as well as AOL’s DSP and SSP, was the biggest beneficiary: Revenue was up 60% year over year.

AOL’s better monetization of inventory suggests it is executing better than Yahoo, the other first generation digital publisher to which it is often compared. During its earnings call, Yahoo said it was struggling with declining CPMs as it tried to increase its premium inventory.

According to Armstrong, AOL’s premium, brand-focused inventory formats, known as Project Devil, are one reason it has been able to resist commoditization of many of its ad units. Two years ago, AOL expanded those Project Devil units to mobile devices. In April, it announced native mobile ad units. While mobile is known for lower CPMs, these two formats have helped AOL extract pricing premiums and give advertisers a higher ROI from a format still known for lower-than-average performance rates. “The differences between a user on mobile and desktop requires ads and native ads that work well on mobile,” Armstrong said.

Adapt.tv, which was acquired in August 2013, “has a growth rate north of 60%,” said CFO Karen Dykstra, and was one reason for the strong revenue growth in AOL’s third-party platforms business.

While AOL may have emphasized building up its content in years past, with its acquisitions of the Huffington Post, TechCrunch and Engadget, it seems the focus has shifted to the other end: ad tech and programmatic. “We have the best content on one side, with best code and ability to scale on other side,” Armstrong said. Now that the company’s ad technology is mostly in place, the challenge is operationalizing these functions.

Armstrong said AOL is now “one of two players with a full stack like this,” a reference to Google. While many publishers have to deal with a “technology tax” that takes almost half of ad revenue away, “Our premise has been to remove that to allow value to go to supply and demand side,” giving advertisers a better ROI and AOL and publisher partners better returns.

When asked about the trend of bringing programmatic buying in house, Armstrong instead focused on the different trend of agencies and brands taking ownership of their data. “Clients and agencies are getting organized around their data. You will have the largest one hundred advertisers with data solutions internally, and those will be plugged into the agency and publisher community. We’re currently building our socket and plug for people to connect to our data and plug their date into our system, and we’re in a strong position.”

Armstrong sees the ad tech world as bracing for a wave of consolidation. “Our company’s take is that there are 200 ad tech companies, and it feels like there are going to be chairs for 25 to 30 over time. There’s going to be a wave of consolidation, in media and ad tech overall.” One of those chairs, presumably, is for AOL. “If you look at our results vs. industry trends, what you see today is the new AOL. What we have built in the content business and programmatic ad tech business is something that is not replicable.”

Must Read

Comic: S.P. O'Middleman's

TripleLift CEO Dave Clark Abruptly Exits After Setting The SSP On A New Trajectory

Dave Clark, who’s led TripleLift for the past two years, is stepping down, effective immediately, and is being replaced by a coterie of TripleLifters.

shopping cart

Moloco Invests In Its Competitor Topsort As The Retail Media Stakes Go Up

Topsort can lean into Moloco’s algorithmic personalization, while Moloco benefits from Topsort’s footprint with local retailers in the US and in Latin America.

CDP BlueConic Acquires First-Party Data Collection Startup Jebbit

On Wednesday, customer data platform BlueConic bought Jebbit, which creates quizzes, surveys and other interactive online plugs for collecting data from customers.

Privacy! Commerce! Connected TV! Read all about it. Subscribe to AdExchanger Newsletters
Comic: The Showdown (Google vs. DOJ)

The DOJ’s Witness List For The Google Antitrust Trial Is A Who’s Who Of Advertising

The DOJ published the witness list for its upcoming antitrust trial against Google, and it reads like the online advertising industry’s answer to the Social Register.

Why Vodafone Is Giving Out Grades For Its Creative

One way to get a handle on your brand creative is to, well, grade your homework, according to Anne Stilling, Vodafone’s global director of brands and media.

Inside The Fall Of Oracle’s Advertising Business

By now, the industry is well aware that Oracle, once the most prominent advertising data seller in market, will shut down its advertising division. What’s behind the ignominious end of Oracle Advertising?