Peter Kafka

Recent Posts by Peter Kafka

Tim Armstrong Finally Gets To Boast: AOL Ad Sales Moving Up

It’s taken Tim Armstrong a couple years, but he finally has some good news to share about AOL’s ad business: It actually grew last quarter.

Or at least part of it did: Display ads were up four percent for the first quarter–the first time that number has moved up since 2007.

Overall ad revenue was down 11 percent, because AOL’s international and search ads are still shrinking. And AOL’s display numbers still lag the rest of the Web industry. But those numbers are all better than Wall Street expected, and any turnaround is a turnaround for Armstrong, who has been preaching patience since he came aboard from Google two years ago.

The key number to look at for AOL is its domestic display results, which grew 11 percent. Factor out the effect of its HuffingtonPost acquisitions and other buys, and that number is still up six percent. AOL says it’s been able to do that because it has finally overhauled it sales force and strategy, which has the site trying to sell fewer ad units for more money.

AOL overall revenue dropped 17 percent, and net income dropped 86 percent. The revenue drop is expected as AOL’s dial-up business fades away (but there are still 3.6 million people paying an average of $18 a month!), and expenses from its acquisition binge (and subsequent layoffs) cut into profits.

Armstrong and company are taking a modest victory lap on their earnings call right now; I’ll update if needed.

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There was a worry before I started this that I was going to burn every bridge I had. But I realize now that there are some bridges that are worth burning.

— Valleywag editor Sam Biddle