AOL ad revenue growth stalls

by Tristan O'Carroll, Media Week 30-Apr-08, 12:20

LONDON - AOL has suffered a blip in its ongoing bid to transform itself into a major global online advertising player, with its ad revenue growth stalling in Q1 2008.

AOL is engaged in a strategy of focusing increasingly on advertising sales, following the sale of several of its ISP businesses around the world. Last year, it created the Platform A ad network to offer its Advertising.com, Tacoda, Third Screen Media, Lightningcast and ADTECH operations under one roof.

But according to parent company Time Warner's Q1 2008 results, AOL ad revenues grew only by 1%, or $3m (£1.5m), year on year. Time Warner said that AOL's advertising revenues partly reflected a decline in display advertising income.Time Warner did note, however, that its ad revenues in Q1 2007 were boosted by a one-off benefit of approximately $19m (£9.6m), related to a change in an accounting.

By comparison, AOL ad revenues in Q4 2007 were up 18% from the previous quarter, and in Q3 2007, they were up 13% from the prior quarter.

Across the overall AOL business, Q1 2008 revenues totalled $1.13bn (£575m), down $1.46b(£743m) compared with Q1 2007. The bulk of the revenue loss resulted from a decline in subscription revenues partly resulting from AOL's decision to offer its e-mail and other products free of charge to Internet consumers, as well as the sale of its ISP business in Germany.