Brainstorm Tech 2010

Where the Fortune 500 and the innovators meet to shape the future of business. (July 22-24, 2010)

AOL struggles for ads during overhaul

June 9, 2010: 10:47 AM ET

This is the first in a series of articles leading up to Fortune Brainstorm Tech, which takes place July 22-24 in Aspen, Colo. The articles will look back at the progress of companies that presented at Brainstorm in 2009 as well as look forward to those that will present this year.

By Shelley DuBois, reporter

AOL was coming back with a vengeance, brand-new AOL CEO Tim Armstrong told Fortune's 2009 Brainstorm Tech conference last year. He was fresh out of the starting gate, and had just done a 100-day "listening tour," checking in with AOL's global workforce.  He was pumped, and ready to shake up the brand.

But the problem with cleaning up a brand is that there's some turmoil in the interim. For AOL (AOL) that meant trying to rejuvenate its image, cutting costs, cutting jobs, yanking some investments, making others. Armstrong also needs to figure out how to turn AOL's strengths -- instant messaging and customer familiarity -- into a profit.

At last year's conference, Armstrong said that AOL was going to do for online content what Google (GOOG) did for online advertising. That is, build a thorough, targeted delivery method from the ground up. Unfortunately, you need advertising to pay the bills to make the content, and advertisers have been cautious during AOL's massive makeover.


Advertising revenue dropped 19% percent to $354.3 million, according to AOL's first-quarter earnings report. The company's profits were $34.7 million, down from $82.7 million last year. Armstrong said that AOL has a ton of data about users, which should be money in the bank as far as targeted advertising. But right now, the company is still working on tuning up the platform.

Armstrong just appointed 28-year-old Maureen Sullivan as chief marketing officer -- she used to work for Google as Armstrong's assistant. At AOL, she's been working on logo redesigns to freshen up the site. AOL has also built a "Homepage Blog," which updates users about new AOL features like themes and privacy settings. It's only had one post in 2010, and it was in February.

Last year, Armstrong mentioned that AOL was going to move social networking site Bebo into the venture capital arm of the company and monitor its performance from there. In April, AOL announced that the match didn't pan out, and it would either sell Bebo or shut it down. The company is still looking for a way to link its instant messaging capabilities, which are strong, with solid social networking partner.

AOL's to-do list also includes plans to modernize Mapquest and manage a host of other offspring properties, like Engadget, Autoblog, and hyperlocal journalism site Patch.com, that will fuel AOL's proposed strategy to carpet-bomb online content. At the "D: All Things Digital" conference on June 3, Armstrong announced that AOL would be looking for a partner to help power its search engine for the site. He said that so far, he's been talking with his former company, Google.

Armstrong is on deadline, according to a Business Insider blog post that mentioned an investor note from AOL chief financial officer Artie Minson who said that Armstrong will have another year to start pulling the company up by its bootstraps.

He will appear again this year at Brainstorm. We'll see if the overhaul is over and he can really start pushing a fresh brand.

More video from Brainstorm Tech 2009:

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About This Author
Shelley DuBois
Shelley DuBois
Writer - Reporter, Fortune

Shelley DuBois writes on management issues for Fortune.com. Before joining Fortune, she was a producer for National Public Radio's Science Friday and worked for Wired. Shelley has a graduate degree in science, health and environmental reporting from New York University. She lives in Brooklyn.

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