It’s been 100 days since Tim Armstrong, 38, leapt from Google to become CEO of AOL, charged with spinning it off from Time Warner and redefining it as a stand-alone entity. He’s spent the better part of those days on various planes, visiting the company’s offices around the globe as part of a crash-course in all things AOL.
Along the way, he came up with a new structure for the company, which will be divided into five key areas of focus: content production (MediaGlow), the world’s largest display-ad network (Platform A), local information and services (MapQuest), communications (AIM, ICQ) and AOL Ventures (Bebo). Now comes the harder part: executing the plan.
We sat down with Mr. Armstrong last week to talk about what comes next.
Ad Age: For nearly a decade, AOL’s narrative has been about a failed merger. Is that changing?
Mr. Armstrong: A big part of fixing AOL is getting AOL to believe in itself. There are a lot of great things happening at Platform A and MediaGlow, and some of the international services. Until the company believes in itself, AOL didn’t have its own space and identity in the marketplace. The opportunity is to get out from under the negative history and figure out the value AOL offers for consumers and for publishers and advertisers.
Ad Age: What role can AOL play in fixing online display advertising, which suffers from low ad rates and bad creative?
Mr. Armstrong: Measurement is critical and the more transparent measurement gets, the more you will see a pickup in how advertisers see display campaigns and what they’ll be willing to pay for them. Another question is what is the breakthrough format for display? That is something that is attainable, it’s just a question of who’s going to do it. Ideally what you have is a very well-targeted display ad with good metrics behind it and a user experience that isn’t obtrusive. The content of the ads has to be really good.
Ad Age: Until recently, most thought AOL would sell its internet access business. But you consider it core. Why?
Ad Age Digital DigitalNext MediaWorks Mr. Armstrong: Think of any news site on the web that sells subscriptions; AOL has four times as many people as the largest subscription service. We have people who pay to use our products and services, and they are heavily engaged in our content. If you erase the brand perceptions of AOL, and consider that people pay to use our properties, you would probably consider this one of the most valuable audiences on the internet.
Ad Age: Clearly providing data on AOL users to marketers is a big part of the strategy. Does that mean you’re concerned about the movement to regulate the ad targeting business in Washington D.C.?
Mr. Armstrong: If you don’t trust the service we are providing because you think your privacy is being violated, there is a good chance you will switch. If you cut through it all, trust is probably the No. 1 thing we try to get across to our consumers. We will spend more time in Washington, definitely.
Ad Age: You’ve targeted the end of the year for the spinoff. Does that mean you won’t be getting much else done?
Mr. Armstrong: It’s a lot of work, but we’re actually getting through it pretty quickly. Time Warner just went through the process with cable, so they’re good at it.
Ad Age: What are your priorities for the next 100 days, then?
Mr. Armstrong: If the first 100 days were a discovery process and a decision-making process for what AOL is, the next timeframe will be a real concentration externally to get into the value we’re providing to the ad community, and a lot of improvement to our products. At a baseline level, you are going to see improvements to MapQuest. Some of the pages on MapQuest had 17 ads on them. We’ve just removed 10 of the ads. You are going to see us bring down the total amount of ads and concentrate on the value for advertisers.
Ad Age: You’ve made a couple of acquisitions last spring; do you anticipate making more?
Mr. Armstrong: Yes, for technology and talent. I could picture us doing a number of smaller acquisitions over the next time period.
Ad Age: TMZ.com is a joint venture between AOL and Time Warner; where will it end up after the split?
Mr. Armstrong: That’s up for discussion. We are basically open to the right outcome for TMZ. We’d love to have the site be as valuable as possible. We haven’t decided yet what happens with TMZ. That is one of the issues we have to work through before the spinout.
Ad Age: Does Bebo have a future at AOL?
Mr. Armstrong: Bebo has an opportunity to prove its products and services. Bebo plays in a very competitive space; it has big market share in specific countries. An AIM profile vs. a Bebo profile are very different experiences. I would argue that the integration of Bebo [with AOL] is less important than having Bebo focus on its core product and service and really try to improve in the social-networking space.
Ad Age: What does AOL stand for?
Mr. Armstrong: A safe environment, very entertaining, a great content company. As a consumer, you will see this as a company that delights you. The model is Disney. We are both buying content and producing content today. The question is how does this company become great at scaling that content and providing value to advertisers?
Ad Age: Would you implement TV Everywhere to get more TV content?
Mr. Armstrong: I’ve spent a lot of time talking to [Time Warner CEO] Jeff Bewkes about this and I think it’s fundamentally a good idea. AOL will be very supportive of it and will also participate in it. In general for consumers, it’s a good idea because it will open up a lot of content. Video online is going to be a very big space.
Ad Age: Are you happy with your Google search deal, which expires in December?
Mr. Armstrong: We’re in the ninth year of the deal. People at AOL are happy with the Google partnership and I think we will continue to work with them. We will go through the end of the contract and then figure out what the right partnership is going forward.
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