AOL paid a reported $80 million for mobile advertising startup Third Screen Media in 2007, trying to tap the small (but promising) mobile ad market.
Now the industry scuttlebutt is that new AOL CEO Tim Armstrong and ad boss Jeff Levick are considering shutting down AOL’s mobile ad network — or at least scaling it back and letting publisher relationships lapse.
Instead, AOL is said to be focusing on mobile content and rebuilding its mobile ad technology to better serve AOL-owned properties.
Here’s a few things we’ve recently heard from mobile industry insiders:
- AOL is not renewing deals with publishers on its mobile ad network, letting them go to the competition.
- “They’ve vanished” on publisher proposals, says one industry source.
- “They’re losing customers left and right,” says another industry executive.
- AOL’s mobile ad network is “sinking fast,” says another industry source.
- AOL is “focusing more on internal properties” says yet another.
- Meanwhile, many Third Screen Media employees are supposedly shopping their resumes around.
This makes sense. As AOL spins off from Time Warner, one big focus will be building up its AOL Media business into “Time Inc. for the 21st Century.” This includes a big mobile Web publishing business, plus mobile properties like AOL Mail, MapQuest, AIM, iPhone apps, etc. Monetizing those sites first should be AOL’s priority.
And as far as fixing its ad tech goes, it probably makes sense to do it now, while mobile advertising is in its infancy, versus waiting until it’s a more important business. There’s no sense in maintaining relationships with publishers if AOL is going to burn them with substandard technology.
So the right path may be to let mobile ads go for now, build up better tech, monetise owned-and-operated mobile inventory, and then think about growing the ad network again in the future.
See Also: AOL’s Next Step: Layoffs