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AOL endures intense internet advertising competition
Time Warner's AOL has found that its jump from a subscription model to an ad-supported model has caused a slowdown in revenues.
The New York Times reports that the company has faced "a precipitous slowdown in advertising growth", but Time Warner chief executive Richard D Parsons has said it is probably temporary.
This problem is shared by other major internet portals including Yahoo and Microsoft, who are facing increased competition from social networking sites, and because web users are more savvy about how to look for things online than they used to be.
"Just like Yahoo, AOL is fighting MySpace, Facebook and others for audience and ad dollars, and those are tough competitors," said RBC Capital Markets analyst Jordan Rohan.
However, AOL has bought online advertising network Advertising.com, which collects ad space around the web and sells it to marketers, allowing people to reach a huge audience that is becoming more and more fragmented.
It is now AOL's fastest-growing unit.
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Search Marketing news posted on 22 August 2007
