To complete our triumvirate of woe-is-AOL posts this morning…
At an investment conference last week, Time Warner CEO Jeff Bewkes reiterated that AOL’s Q1 ad revenue would be “flat.” A reader tells us that it will, in fact, be “down.” The reader also says AOL’s management churn continues:
Now that bonus season is past lots of churn in AOL land. In my dept alone we’ve had 1 SVP, 1 VP, and 3 directors give notice (out of less than 100 people in the hierarchy tree). No bad news beyond what is already publicly out there, but people are starting to see the writing on the wall and looking for other opportunities.
Ad revenue is also going to be way down for Q1. I imagine Bewkes is going to need a hug after quarterly numbers come out.
We are trying to confirm the ad revenue information, but, as yet, haven’t. One source we spoke with doesn’t know the current numbers but, for two reasons, thinks a “down” quarter is likely:
- Last year’s Q1 reportedly contained two revenue items that will disappear this year–a discontinued advertising program and some revenue that flowed through from Q4. [We assume these items were baked into AOL’s “flat” forecast.]
- The budget that AOL submitted to Time Warner corporate for 2008 reportedly assumes a 15% boost in revenue-per-page, while the source believes the actual RPM performance will be closer to a 15% drop (primarily because of the weakness at AOL’s owned-and-operated properties). The budget always reportedly assumes that pageviews will grow 15%, while the source expects them to grow far more slowly.
The year-over-year growth rate of AOL’s ad revenue for the past four quarters is as follows:
A “flat” quarter, therefore, is obviously bad news, especially in light of still-strong industry growth. A “down” quarter would be really bad news.