A year ago, AOL was prepping plans to launch new ad formats. Its initiative, codenamed Project Devil, was designed to provide ads that are more eye-catching and engaging than 'normal' ads.
As we detailed at the time, the ads would be up to four times larger and "be enabled with new functionality, with room for a photo gallery, a video, coupons, Facebook or Twitter updates or maps".
Project Devil was seen as crucial to AOL, which had been seeing significant double-digit declines in ad revenue. If AOL CEO Tim Armstrong was going to turn the company around, it seemed that the new initiative's success would be crucial.
Last week, however, we learned that AOL's new ad formats aren't finding as much tracking as hoped.
The good news for AOL: it's not because advertisers don't like the format. According to Reuters' Jennifer Saba, they do. The problem is that the ad units don't scale:
...advertisers...are reluctant to spend money building out a custom ad that only runs on AOL, said David Cohen, global digital officer at the ad agency UM. He added that he is a big advocate and partner of AOL and its efforts.
Some publishers, including Hearst and the Wall Street Journal Digital Network, are adopting the ad units. But for many advertisers and agencies, that's still not enough.
Rich Kim, a VP at agency RPA, told Reuters "I just wish something like this could be leveraged elsewhere as a more a cost effective solution for my clients." As Kim sees it, AOL's ad units would need to be available across the comScore 100 to be viable.
In other words, AOL has developed ad formats that could be successfully sold to advertisers, demonstrating that advertisers are open to innovation (a good thing to be sure), but AOL alone doesn't have the reach they need.
The big question: given advertiser interest in Project Devil, is it long before more publishers adopt what AOL created? That remains to be seen, but it does seem probable that in five years, today's standard IAB ad units will have more company. The IAB itself is seeing to it.
Ironically, AOL may not win, even if its ad units gain broader adoption. After all, AOL would no longer have a competitive advantage, as advertisers could buy the AOL-derived ad units from other publishers, likely at prices less than what AOL is charging today.
The lesson for publishers: building your own ad units is a double-edged sword. Yes, advertisers are looking for creativity, but creativity that manifests as a solution exclusive to one or a few publishers is problematic. In other words, just because you innovate well in the digital advertising space doesn't mean you'll benefit the most from it.