AOL expects ad sales to be down 41% from last year, despite the fact that the overall ad market is recovering and that their biggest competitors are increasing their online ad revenues. In the third quarter, the online advertising is up 15%, ESPN.com is up over 10%, WSJ.com up 24%, Yahoo is up 22%, and the NYTimes.com is up 30%. Lower prices and the opportunity to reach people at work are among the reasons cited.
AOL is down because they are no longer able to muscle big advertisers and aspiring brands into buying big packages. No doubt they’re also compensating for some of their earlier absurdist accounting. The Washington Post has an excellent article about AOL/TW’s failure to achieve synergy, and how many executives in the two companies doubted it was possible.
The good news is that this may signal a more subscriber-friendly AOL in the future as they come to realize who’s really paying the bills.