AOL may not have been a profitable business for Time Warner, but the internet service provider is finding a new revenue stream in the publishing business.
Time Warner famously merged with AOL in a 2000 deal valued at over $100 billion. By 2002, the companies posted a loss of $100 billion. Low advertising revenue and incompatible business goals made AOL a loss leader for Time Warner. The companies announced that they would go separate ways this spring. And while AOL wasn't able to bring in enough advertising revenue for its parent company, the portal is now looking to grow revenues by increasing its staff of writers and creating more content.
Essentially, AOL is trying to make a place for itself in the wreckage of traditional media. Their new strategy involves hiring established writers, plugging them into verticals attractive to advertisers and sending the company's impressive traffic numbers to the new sites.
They're competing with established publishers for eyeballs. And seem to be making some headway. According to AdAge:
"You've got an economic environment tailor-made to building this business. Traditional magazines are in disarray, talent is cheap, and audiences are splintering and accepting of new brands. AOL has more than 300 people producing these sites in New York and has contracts with about the same number of freelancers. In the past six months, AOL has hired more than 50 journalists from places such as the Associated Press, Washington Post and USA Today."
And the formula of bringing new blood into the environment of AOL's impressive audience numbers is working. For instance, AOL's new political site Politics Daily outpaced Politico's traffic numbers only a month after launching.
AOL's new CEO and former Google VP Tim Armstrong, tells the Wall Street Journal that he is focused on "improving AOL's Web sites and products, which include email and instant-messaging services, a popular Web portal and sites like MapQuest. He says such a strategy is key to reigniting buzz around AOL and kick-starting ad revenue, which dropped 20% in the first quarter from a year earlier."
The new publication model is meant to combat falling traffic for the portal. AOL.com's traffic fell 4% in May as the company shed dial-up subscribers. Traffic to the portal's home page also fell 32%. But ComScore reports that the 70 sites in AOL's MediaGlow unit grew 5% to 76 million unique visitors in May in the same time.
And while AOL branding is falling by the wayside, the sites are benefitting from AOL's large network of advertisers. While a niche content site has a small range of advertisers it works with, AOL can help advertisers reach different audiences by simply shifting between its store of new verticals.
AOL's president of gobal Sales Jeff Levick tells AdAge:
"We are able to tell advertisers, 'These are the kinds of consumers engaging here, the same ones you wanted to engage with two minutes ago when they were on TMZ or Walletpop, or when they were interested in Glidden paint.'"