The HQ move and the creation of an “integrated global ad platform” called “Platform A” illustrates company’s new emphasis on its ad networks instead of the AOL portal and other properties. This is the final dagger in the back of the old AOL. No news yet on headcount reductions. Release.
Before being infected by the company’s enthusiasm about ad networks, remember: They generate tons of revenue but relatively little profit. Selling $1 of advertising on AOL’s properties probably nets the company $0.50. Selling $1 of advertising on Advertising.com, Tacoda, and other third-party serving/rep services–no matter how technically sophisticated–probably nets the company about $0.10. Given the slow growth of the web’s major properties (AOL, Yahoo, et al), as well as the explosion of inventory offered by smaller, more targeted publishers, ad networks are an important piece of the puzzle. From a profit perspective, however, they are a whole different animal.
AOL CEO Randy Falco and President Ron Grant will present at Merrill’s media conference in LA this evening. We’ll let you know if they have anything interesting to say. Release excerpts after jump.
The new entity, called Platform A, will offer advertisers access to the most sophisticated targeting and measurement tools available in the marketplace across Platform A’s unmatched network of third-party sites, as well as AOL’s owned and operated sites. Platform A already reaches more than 90% of the domestic online audience, according to comScore Media Metrix. Platform A builds on the success of Advertising.com, which operates the largest third-party display network, and integrates behavioural targeting leader TACODA, Third Screen Media, which operates the largest mobile media network, market leading video ad serving platform Lightningcast, and ADTECH’s global ad serving platform.
AOL also announced that it will move its corporate headquarters to New York City, locating it in the centre of the media advertising marketplace.
“With these changes, Randy Falco, Ron Grant and their team have positioned AOL to benefit fully from the trends that are reshaping the online advertising business and to expand AOL’s leadership in it,” said Jeff Bewkes, President and COO of Time Warner. “Advertisers are increasingly demanding quality, scale and measurable results, and the new Platform A organisation delivers that.”
“With the increasing fragmentation of online audiences, the best way to serve advertisers is to enable them to harness massive advertising networks that reach across the entire Internet, not just our AOL websites,” said Randy Falco, Chairman and CEO of AOL. “And over the past eight months, we have put together a network with unprecedented reach and state-of-the-art solutions that accomplishes this. With the launch of Platform A, we are unleashing this powerful network to deliver unrivalled transparency and return on investment for our marketing partners.”
urtis G. Viebranz was named AOL EVP and President of Platform A, reporting to AOL President and COO Ron Grant. Viebranz was formerly CEO of TACODA. Reporting to him will be Lynda Clarizio, who continues to head Advertising.com, and Kathy Kayse, who will run AOL brand solutions, focusing on custom solutions leveraging our premium inventory and the assets across Platform A for top brand advertisers.
AOL will relocate its corporate headquarters to 770 Broadway in New York City, where the company has leased office space and where AOL’s New York-based advertising and programming operations also will be based. AOL will continue to have significant operations in Dulles, VA, as well as offices in Mountain View, CA, and other locations.