AOL’s “startaround” plan, led by CEO Tim Armstrong, relies heavily on display advertising. Over the past year, the portal has stepped up its content creation business, invested in talent, and tried to increase the quality of its sites. All this is to attract more advertising dollars. Starting next month, the company will unveil new – and larger – ad formats, designed to draw more attention from readers.

But the question remains: Will bigger ads bring more returns for online publishers in 2010 and beyond?

The new ads, codenamed Project Devil, will be up to four times as large as current inventory on AOL’s properties. The ads will also be enabled with new functionality, with room for a photo gallery, a video, coupons, Facebook or Twitter updates or maps. Some ads will also be enabled with a 3D product view and click-to-buy functionality.
According to The Wall Street Journal:

is betting the new ads will do a better job of grabbing consumers’
attention and holding it for a longer period of time. If so, that could
boost AOL’s momentum in generating ad revenue as it tries to transform
itself from a subscription-based service connecting people with the
Internet to an ad-supported digital-media business.

“This has
been an amazing partnership with the world’s most innovative agencies
and advertisers,” said AOL Chief Executive Tim Armstrong in a statement
referring to the new ad format. “Change is afoot.”

It helps that AOL has an impressive traffic hose coming from its dial-up service. But those numbers are dwindling, which is why Armstrong’s AOL is trying to reinvent itself now. As J.P. Morgan analyst
Imran Khan tells The Journal:

out a new ad format could help, but this is not a one-day fix. This is
a turnaround story that will take some time.”
This  year is an important one for AOL. Despite impressive investment in quality journalists and bloggers, AOL has not been growing readership overall or ad revenues — yet.

In the last quarter, for instance, AOL’s advertising revenue fell 27% from a year earlier. The upheaval of the company’s turnaround could be contributing to some of AOL’s weak returns, but very soon Armstrong needs to start returning positive results.  AOL isn’t the only one trying to grab users’ attention with bigger ads. A year ago, The New York Times started implementing roadblock ads with premiere sponsors that extended over the content of the paper’s homepage online.

The paper has seen positive results with those ads, but like most unexpected advertising inventory, it was big news at its launch and interest has dwindled since it became more normal.

Even with new formats, there’s always the concern of banner blindness. That is why AOL is also adding new elements to the ads they will offer.

The new ads won’t simply disrupt editorial with innovative ad sizes, they’ll also compliment surrounding content. As the ad below shows, AOL is trying to bridge the gap between editorial and advertising on its pages. 

It’s really the progress of so-called advertorial that will be important for display advertising success going forward.

Increasingly digital advertisers are getting excited about display. Companies like Google are hoping the recent growth in the display market (5.3% in the first half of 2010 according to Kantar Media) will continue. And as consumers get smarter and learn to ignore irrelevant content, the only way that display ad growth will continue is if the ads get smarter with them. 

Images: Digits