AOL Execs Adapting to Increased Performance Ad Demands

This post was written by Kate Kaye.

AOL clearly aims to be among the elite online ad players, and its now-official purchase of Quigo for $340 million might help it along. If anything, it should assist AOL in accommodating advertisers’ increased interest in performance-based advertising. During AOL-parent Time Warner’s earnings call this morning, the firm said it’s been grappling with how best to maneuver in a world where ads once sold as CPM-based
“premium” inventory are becoming cost-per-click or cost-per-action buys sold through third-party networks.

Even AOL has been shifting once-premium inventory sold direct by AOL onto its Advertising.com network. According to the company, revenues from ads on partner sites, primarily Advertising.com network sites, were up 21 percent in the third quarter. The company reported paid search revenues on AOL owned-and operated sites rose 15 percent, while display ad revenues on AOL sites were up 6 percent.

“Display growth in advertising is not at the level we’re targeting for the longer term,” said an exec during today’s call with investors. AOL has redesigned its homepage, along with other section pages in the hopes of better ad performance.

Overall, AOL reported an increase of 13 percent in online ad revenue over Q3 2006 to $61 million, not enough to relieve a massive 56 percent drop in subscription revenues.