Brainstorm Tech 2010

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

Tim Armstrong on AOL's search deal: it's not a two-horse race

July 23, 2010: 7:27 PM ET

As AOL eyes turnaround strategies, one business still seems to be in demand: selling its search traffic.

Tim Armstrong at Fortune Brainstorm Tech

AOL's nearly $700 million-a-year search deal with Google (GOOG) will expire in December, and CEO Tim Armstrong is not limiting the next deal to the usual two suspects: Microsoft (MSFT) and Google. "Search is heating up from a multi-partner space—we are not talking to two companies," said Armstrong while speaking at Fortune's Brainstorm Tech conference.

As he embarks on a turnaround that has yet to manifest, Armstrong is thinking long into the future. "What you do today is probably going to have a seven-year outcome," he explained. When a new search deal is announced later in the year, AOL-watchers may not see Google, which currently supplies a large percentage of the company's revenue, as its only partner.

It's a sign that Armstrong is still open-minded about the company's future strategy for generating revenue. He did acknowledge that he expects advertising to be the company's primary business going forward, making the point that AOL's audience is more valuable than most, but he didn't rule out other forms of making money such as micropayments. Picking up on football, he elaborated: "The AOL game plan is 'Throw it to the open receiver.'"

Armstrong remains convinced there is real value in building a platform for original reporting. Addressing concerns over the quality of that reporting, he pushed the audience to think about AOL as a platform rather than the content which lives on that platform. "The press writes that it's a content farm that's ruining everything," he said. "It's not. It's a platform and you can dial the quality up and down." Expect to see Armstrong continue to invest in expanding its hyperlocal news sites.

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Jessi Hempel
Jessi Hempel
Senior Writer, Fortune

Jessi Hempel is a New York-based technology writer for Fortune. She has written extensively about digital media, online advertising and social networking. Before joining Fortune in July 2007, Hempel worked at BusinessWeek and most recently served as their innovation department editor. Hempel is a graduate of Brown University and received a Masters in Journalism from The University of California at Berkeley.

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