AOL Pushes Ad Platform Across the Atlantic

AOL announced Friday it is setting up its Platform-A Internet advertising service in Europe. The expansion is part of the Time Warner unit’s effort to extend the reach of its advertising business worldwide by the close of 2009.

The move comes less than one year after Time Warner flipped its AOL script in the U.S., shifting roles from being Internet portal to a one-stop Web-based advertising business. The service offers a combined product that includes search engine marketing, mobile and multimedia advertising, behavioral targeting and social media advertising techniques.

The service enables advertisers to use the company’s optimization technology and behavioral targeting in combination with Advertising.com’s social media, affiliate marketing, search, video and mobile inventories, according to Lynda Clarizio, president of Platform-A.

Brendan Condon will helm Platform-A’s international operations, AOL said.

A European Excursion

Platform-A’s push into the European advertising market will leverage its existing advertising operations in nine countries, including France, Germany, Netherlands, Spain and the UK. Over the past several months, AOL has acquired advertising outfits such as Advertising.com, German-based Adtech and Buy.at, an affiliate network out of the UK.

Its most high-profile purchase recently, however, is Bebo, the UK-based social media company. While the site is on the radar in the U.S., it’s more popular among users in the UK.

“It’s a major acquisition in terms of a consumer-facing product. That will certainly help them retain and sustain their reach to a younger demographic, which is one of their strengths. It will certainly give them more of a presence in Europe and a whole lot of advertising inventory,” said Karsten Weide, an IDC analyst.

The online ad company will incorporate the services it gained in these acquisitions with existing properties including Quigo, Tacoda and Third Screen Media.

Further expansion into countries such as Austria, Belgium, Switzerland, Poland, Italy and Australia will take place over the course of the next 18 months, AOL spokesperson Anne Bentley told the E-Commerce Times.

The Slow Growth Solution

Since AOL recast itself in the guise of an online advertising business, growth has been less than brisk, Weide told the E-Commerce Times.

“Advertising revenue growth rate has been growing slower and slower and slower. On AOL.com, the growth rates have been very good, around 30 percent in late 2006 to early 2007. Then they went down. Q2 was 12.2 percent. In Q3, it was 9.7 percent and Q4 3.7. [In 2008] Q1 was minus 6.8 percent growth. So on AOL proper, sales are not doing well,” he explained.

Things look better for AOL’s Advertising.com third-party ad unit, where growth has averaged about 35 percent. “That’s still going strong,” Weide noted.

Inefficiencies and redundancies resulting from the purchase of different entities brought together under the Platform-A umbrella are presumably part of the problem, said Harry Wang, a Parks Associates analyst.

“The integration effort — I don’t think they have made a smooth transition to align all of the ad sales team and technology together so they have a coherent offering for advertisers. Advertising.com is a great sales force, and other platforms like Tacoda and Quigo, those types of different components all have their own advertising salespeople and target different types of advertisers,” he pointed out.

Trying to coalesce these different operations and put out a single yet coherent core capability offering to advertisers is lost in translation as it moves across the different components of Platform-A. “They need to do a better job of integrating the different components,” Wang explained.

Perhaps in recognition of its difficulties, AOL laid off some 100 Platform-A employees in an effort Clarizio deemed critical for success.

“If you look at the different components of Platform-A, it definitely has all the ingredients for it to be [a] successful platform and sell ads to advertisers, monetize their different inventory and get the message out to consumers,” Wang said.

That said, however, Platform-A is “still a work in progress,” Wang told the E-Commerce Times.

“They have all the great parts, but great parts don’t make a BMW automatically. There is a lot of synergistic value there locked in Platform-A that hasn’t been released to drive the revenue growth that AOL tries to see from the advertising side,” he explained.