AOL posts double-digit display ad growth in Q2

By Andrew Couts August 9, 2011

AOL-Tim-Armstrong

AOL announced today its earnings for the second quarter of 2011. The Internet giant beat the Street’s expectations, raking up double-digit earnings with the help of strong advertising sales and cost cutting measures.

A complete turnaround in display advertising played a major role in AOL’s good fortunes, with a 14 percent total increase in that category. That’s up from a 4 percent increase in the previous quarter. Total advertising revenue jumped 5 percent to $319 million, a welcome change from the nearly nonexistent rise in the first quarter.

“AOL’s return to global advertising growth for the first time since 2008 reflects the hard work of our team and another meaningful step forward in the comeback of the AOL brand,” said Tim Armstrong, AOL’s Chairman and CEO, in a statement. “AOL is singularly focused on becoming the next great media company for the digital age and we have positioned the company’s best people, technology and assets in front of some of the largest opportunities on the internet.”

Armstrong took over AOL after 10 disastrous years under the ownership of Time Warner.

Despite gains in advertising dollars, the company still suffered a loss of $11.8 million, or eight percent, bringing total revenue to $542.2 million. This was partially due to a 23 percent loss in subscription sales. But the drop in this year’s second quarter revenue is still far better than its earnings a year ago, when the company lost $1 billion.

Another factor in the lost revenue was a $17.6 million decline in search and contextual revenue.

Adding to the boost in advertising revenue was AOL’s purchase of the Huffington Post in February, which the company bought for $315 million. During the month of May, the Huffington Post brought in 30 million unique visitors, which pushed the news site’s traffic above that of The New York Times‘ website. The earnings report also gives credit to its flagship technology property, TechCrunch for helping to fuel the upswing in ad dollars.

Editors' Recommendations

Former Digital Trends Contributor

Features Editor for Digital Trends, Andrew Couts covers a wide swath of consumer technology topics, with particular focus on…

Web

Michael Arrington is trying to buy back TechCrunch from AOL

michael-arrington-techcrunch-crunchfund

Last week we reported that TechCrunch founder Michael Arrington was leaving the site to start a venture capital fund named Crunchfund. At that time it was reported that Arrington will most likely remain as an employee of the blog, but no longer retain any editorial power. This was confirmed by Arriana Huffington who is the editor and chief for all of AOL’s blogs, when she said that Arrington will no longer report to her. Since Friday there have been a number of posts by TechCrunch writers discussing their feelings about the deal, and how it will be the end of the tech blog as we know it. Mr. Arrington has now weighed in on the matter, and done so in a way that only he could. Arrington has given AOL an ultimatum to either honor the agreement made when they purchased the blog almost a year ago, or to sell it back.
There are several very sticky issues surrounding this story, but Arrington decided to focus on just one of those and ignore the other landmines such as conflict of interests. Arrington is unhappy with the idea that AOL might stop allowing the blog he created to write independently of the rest of AOL’s blogs headed by Arriana Huffington. If AOL won’t allow the blog to write its own stories following its own rules he would like to buy the blog back, ironically he would most likely need some venture capital to do so. Even though Arrington seems to give AOL only two options there is a third he brought up in his post, “If Aol cannot accept either of these options, and no other creative solution can be found, I cannot be a part of TechCrunch going forward.”
It seems very unlikely that AOL will sell back a company it paid $25 million for in September of 2010. It also seems unlikely that AOL will allow TechCrunch operate independently now that Arrington is investing in companies his blog reports on. It seems as though the initial reports that Arrington will be leaving the blog seem to be more certain than ever before, but maybe not on the terms he originally had hoped for.

Web

AOL website hit by hacker

On top of a particularly difficult week, AOL's postmaster.aol.com website was hacked Saturday afternoon by someone who goes by the name "HodLuM." The site was slightly defaced with a message from the hacker.
"AOL S3RV3RZ ROOT3D BY HODLUM LOLZ!," the message read.
AOL finally discovered the hack, and fixed the page between two and four hours after evidence of the breach was posted to Reddit.com.
There are a number of reasons this hack looks bad for AOL. First of all, someone got into AOL's servers, which is bad enough. Second, HodLuM likely has a sense of humor, as the HTML file used to deface the webpage appears to have been written in Microsoft Word — a sign that the cyber-security experts at AOL weren't exactly doing their job up to par. Third, the ALL CAPS LEETSPEEK used by HodLuM suggests he or she is probably around 13-years-old.
Lastly, the various forums where this hack was posted all included various jokes along the lines of, "AOL still exists?!" Ouch...
It is not clear whether the people in charge of keeping AOL's primary business properties, sites like Engadget, Joystiq and the Huffington Post, are the same people responsible for a relatively unknown site like Postmaster, which is a help site for businesses who regularly send emails to AOL members.
The AOL Postermaster blog has so far not responded to the hack.
The hack of AOL Postmaster comes at the end of a difficult week for AOL. Despite seeing a double-digit surge in display advertising revenue during the second quarter, AOL revealed this week that it was still losing money. Following the dire news, its stock price dropped more than a third (37 percent) from Monday through Wednesday, amidst an overall tumultuous week on Wall Street.
Prices did begin to rise on Friday, however, jumping 13 percent after AOL announced that it would invest up to $250 million in its own stock in an attempt to stop bleeding value.
While the hack of a minor AOL web property has nothing to do with the poor performance of its stock, the incident can only serve to worsen the mood at a company that's struggling to stay upright.

Web

E-commerce continues strong growth with 14 percent increase in Q2 of 2011

Good news for traditional brick and mortar stores has become increasingly tough to come by as the Internet continues accounting for an increasing percentage of the United States consumer’s disposable income. comScore released its estimates for online sales for the second quarter of 2011 today that put e-commerce spending at about $37.5 billion.
That increase marks a 14 percent increase over 2010 and the seventh consecutive quarter in which online shopping has trended up and to the right. The third quarter of 2009, the last decline, showed a two percent decrease over the second quarter.
The increase in usage does not necessarily mean an increase in per capita spending. The report also notes that the number of Internet buyers was up 16 percent, indicating the old adage of a rising tide raising all boats.
“Almost $1 in every $10 of discretionary spending now occurring online,” said comScore chairman Gian Fulgoni in the report. “With economic growth remaining soft, the unemployment rate stubbornly high and financial markets in turmoil, consumers are less optimistic today than they have been in preceding quarters, which raises concerns for the future. We believe the third quarter will be an important indicator of which direction this economy is really headed and what that will mean for consumer spending.”
Another way to take that is: just because online shopping is skyrocketing, doesn’t necessarily mean the economy is recovering.
Consumer electronics, computer hardware and software each grew at least 15 percent versus last year. In addition, the top 25 online retailers saw a market share decline, albeit quite small, from 67.7 to 66.4 percent, indicating that small to medium-sized online retailers have clawed back some turf from the big guys.