AOL: More Eyeballs, Less Money

AOL’s PR team passes along a note this morning trumpeting big increases in October traffic.

Here’s a taste:

AOL programming sites hit all-time high traffic numbers and marked the 21st month of consecutive year-over-year growth for unique visitors, according to the October 2008 comScore Media Metrix report. Unique visitors to AOL’s programming content sites grew 7% year-over-year to 54.3 million in October, and page views more than doubled, up 101% year-over-year to 4.2 billion. Engagement (total minutes) grew 51% year-over-year in October. Total minutes reached an all-time high on AOL.com, growing 27% year-over-year. Additionally, AOL.com page views grew 27%, and unique visitors and total visitors were up 9%, year-over-year, as the site further opened up to third-party content, services and features….”

Etc. ?In the old days, like last spring, this kind of AOL boasting would make competitors at Yahoo (YHOO) quiver with anger, because the Yahoo guys thought that the AOL guys were using legal but sneaky tricks to inflate traffic. Now it’s hard to imagine anyone at Yahoo getting too amped about this stuff, mostly because the people who were most passionate have left.

In any case, the real issue for AOL isn’t traffic. It’s how much that traffic is worth. And those numbers are not so good.

Barclay’s Doug Anmuth, who is covering AOL parent company Time Warner (TWX), sends out his own note this morning, which points out that while AOL’s page views increased 14 percent during the last quarter, overall ad revenue dropped six percent, and display ads at AOL’s own sites dropped 15.4 percent.

His conclusion? “Monetization of non-guaranteed inventory and challenges around Platform A continue to be an issue.” Translation: Doesn’t matter how much traffic you have, if you can’t sell it.

And those problems aren’t going away. Anmuth projects that AOL ad revenue will drop another 4.4 percent in 2009. That’s a projection some might find optimistic.

[Image Credit: Laffy4k]