AOL Waves Away Online Ad Concerns

Stung after a top analyst’s concerns about its online advertising sales, AOL Time Warner swung back, reiterating earlier guidance and pointing to growth in 2003.

Wayne Pace, the New York-based media conglomerate’s chief financial officer, said at a Deutsche Bank media conference on Wednesday that America Online ad sales for 2002 are expected to come in between $1.8 billion and $2.2 billion, down between 33 percent and 19 percent from last year.

He added that the company expected the online ad market to bounce back during the second half of 2002.

That’s in line with predictions AOL made earlier this year. But Pace’s comments come a day after Lehman Internet analyst Holly Becker said she expected the unit’s online ad revenue would fall below the $1.8 billion previously forecast.

Becker, whose comments caused the stock to plummet 4.9 percent during the day, also wrote that she expected the company’s online ad woes to continue into 2003, when America Online sales would fall about 10 percent to $1.6 billion.

Pace disputed that analysis as well.

“We are looking for growth year-over-year off of this year,” he said. While not going into specifics, Pace said that the midyear turnaround in the ad market would prompt more new deals to be signed than AOL lost during the year, thereby contributing to increased 2003 revenues, also in line with guidance.

He also pointed to efforts by chief operating officer Bob Pittman to revamp the AOL marketing structure, an effort that so far has resulted in job cuts and other organizational changes in the unit, which has offices in New York and Dulles, Va.

Pace added that AOL is working to hammer out ad sales models that have worked well in the past — when Pittman served as president of America Online — and that work well in traditional media. For one thing, he pointed to efforts to ink long-term, highly-visible placements, such as AOL’s arrangement with paid search listings provider Google.

“Bob is taking an approach of completely breaking down the past relationships and the past ways we’ve sold advertising at AOL, going back to the anchor tenancy types of things,” Pace said. “Going forward we will look at ways that include not only anchor tenancy-like things like the Google contract … but we will go at more traditional-media types of advertising sales, and there will be different types of value propositions between those two types.”

Pace did not go into detail about what he meant by “traditional-media” advertising arrangements, but said the firm already has seen some early successes.