After news broke today that AOL ADTECH boss Dirk Freytag was leaving the company, people in the market started to wonder: Is AOL about to shutdown it’s entire ADTECH business?
The answer is no. In fact, AOL has named Erhard Neumann the new CEO of ADTECH.
So now the question is…why?
As in…Why isn’t AOL planning to sell or shutdown ADTECH?
ADTECH is an ad-server, much like Google’s DoubleClick. It’s a business-to-business play that doesn’t seem to fit with AOL’s plan to turn itself into a Time Inc. of the 21st century.
One former ADTECH employee tells us “If Tim Armstrong’s looking to cut costs, this would be a prime target.”
“Not only are the numbers bad now, but CPM rates for ad serving are a fraction of what they were. Many of ADTECH’s customer contracts are signed to 2 year terms, and a customer that 2 years ago would have paid 5 cents a CPM would now pay 1 cent.”
Another industry source gave us three reasons Tim Armstrong should shut the thing down (or sell it):
- No record of being able to manage technology on their own behalf, let alone for others. They don’t even have an ad tech product manager and have not been able to recruit one.
- Even if they could, competing against Google is a no win proposition. Not only do they not have the resources and talent, they dont have the ecosystem (ad exchange, viable network, dsp, etc) needed to win many pub accounts.
- Related to point one, they need best in class tech for internal use, embedded in a platform strategy that is broader than just how to do seo really well. They should be agnostic between buying a company/team and partnering. i don’t think they have the time to build organically.