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AOL Cling to Marginal Profit After Advertising Decline
Starting afresh as an independent company, AOL managed to post modest profits in its latest quarterly review this week, but questions are still being raised whether the company can sustain revenue in amidst falling subscriptions.
Revenue for the company was down by 17 per cent compared to results from last year, and the company fully expects to lose “meaningful rates” of revenue in this coming year as dial-up subscriptions continue to fall and AOL’s brand of search marketing continues to be outmanoeuvred by the likes of Yahoo! and Google.
Online advertising revenue dipped by 8 per cent for Q4 to $471.6 million. Despite the drop in revenues the market appears to be stabilising, as the rate of decline slowed from an 18 per cent freefall in Q3.
There were positives for AOL’s display advertising, recording the first improvement in two years. This minor victory was undermined however by a 27 per cent loss of dial-up subscriptions in the US and a dramatic hit on search advertising which dropped by 19 per cent for the quarter.
AOL is still in a period of flux since the break away from Time Warner, and as such keeping the company even marginally profitable is worthy of praise. The Wall Street Journal quoted CEO Tim Armstrong: “We believe the global restructuring should allow us to significantly grow our ability to serve advertisers and ad agencies”.
Time Warner meanwhile posted healthy profits ahead of analyst expectations thanks to box office success from films including Harry Potter, The Hangover and The Blind Side. The company posted full year profits of $2.47 billion having ditched AOL.
Online Advertising news posted by Lily Townsend on 04 February 2010
