August 9, 2011 timestencreative

AOL Increased Ad Revenues

AOL turned its first quarter ad-revenue growth in two years, and investors rewarded the good news by selling off AOL shares.

AOL did, however, miss earnings-per-share estimates by a wide margin, reporting a loss of 11 cents a share compared to an average analyst estimate of 4 cents, and that contributed to the stock hit.  By increasing display ad sales, AOL was able to beat Wall Street’s consensus revenue estimate.

As a matter of fact, AOL booked $319 million in ad dollars for the most recent quarter, a 4.7% gain over the same period last year, while total sales dropped 8.4% to $542.2 million.  It’s access business slid 22.6% to $201.3 million.

CEO Tim Armstrong’s bid to transform AOL from aging internet access business into a media powerhouse appears to be progressing nicely, but not without a few trouble shots.  For the first time since AOL was spun off from parent Time Warner in 2009, AOL increased its advertising revenue and stemmed its overall loss.

AOL’s ad business was driven largely by Advertising.com, its third party network, as well as its video network through its acquisitions of Goviral and 5 minutes, accounting for a 29.3% increase to $93.6 million.  AOL’s premium ad units also drove the bottom line with domestic display-ad revenue notching a 16% gain to $126.8 million, driven partly by its Huffington Post and Tech Crunch properties.

Despite the initial success of the previous strategy, the company let go of its sales chief, Jeff Levick, and placed Advertising.com manager Ned Brody in charge of all sales operations for the company.

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