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Summary:

Sixteen cities in 10 countries, from Baltimore to Bangalore, Denver to Dublin. Twenty-six Town Hall and All Hands meetings. Seventy-one prod…

Tim Armstrong
photo: AP Images

Sixteen cities in 10 countries, from Baltimore to Bangalore, Denver to Dublin. Twenty-six Town Hall and All Hands meetings. Seventy-one product reviews. Fifty-one partner/customer meetings. The numbers charting Tim Armstrong’s 100-day immersion course as the latest chairman and CEO of AOL (NYSE: TWX) sound impressive but what do they add up to for the company on the verge of separating from parent Time Warner? Nothing as meaningful as in the next 100 days and the 100 after that as Armstrong and his team follow through on the consumer-centric strategy that emerged as he covered all those miles:

– Expand AOL-owned content through Media Glow [Translation: Don't screw up what's working.]
– Grow advertising.com and third-party network [Translation: Platform-A didn't work.]
– Push local and mapping [Translation: Don't forget we own MapQuest]
– Focus on AOL e-mail, AIM and ICQ [Translation: People Networks didn't work.]
– Start AOL Ventures with focus on innovation [Translation: Avoid becoming Island of Misfit Toys.)

Where are mobile and international? They should be part of everything AOL does, Armstrong told paidContent in a lengthy interview as he spent the last of his first 100 days trying to set the stage for the phase that starts this Monday. We talked about unwinding People Networks and Platform-A; giving Bebo breathing room; the reasoning behind AOL Ventures, which we’ve confirmed will include Bebo and Userplane; TMZ’s future; whether more layoffs are inevitable and much more. (Our sister site mocoNews has more on mobile.) Edited excerpts follow. We also have Armstrong’s 100-day memo to the staff and a memo detailing who’s who on his staff.

Staci D. Kramer: Is there anything you like about AOL or liked about AOL the way it was before you came in?
Tim Armstrong: There were several things. That’s part of the reason why I came. One is I actually thought AOL had done a nice job of improving the content on AOL so there was starting to be a better user experience. By the way, I’ve been a longtime fan of Engadget and some of the other AOL properties in general; so I actually saw some kernels of things I actually used or looked at, at least, on a regular basis before I got here. One surprising thing when I got here is there were more things, especially in the content space, that were stronger than I had thought.

Do you feel like AOL wasn’t doing a good job of getting the message across that they had these good things or of letting these good things get the attention they needed at the company?
I think there is a clear and clean split between what gets written about

  1. Elliot Spitzer Monday, July 20, 2009

    Hi Staci-
    Why don't you ask Timmy how he plans to make up the difference between the revenue hemorrhaging with the access business and ad sales?

    Tim's response to your question about the distribution/access business was a dodge. It is always about money! Especially when the money is big. How does he figure that if the sub number keeps dropping, that somehow the circulation from those subs will not decline as well?

    When you have 6M people paying you $10/mo that is a sweet deal….but that number is way down from the peak of 30M subscribers and continues to fall every month. If current numbers are correct, the access business is generating $720M a year, today. Tim thinks that $720M a year is less important than the alleged traffic they generate for AOL sites? Give me a break!

    If the declines in the access subs drop to 5M in 2010, that would be a loss of $120M in just one year! Hell, cut that is half and it still a huge number.

    Notice that Tim says NOTHING about how he plans to retain that subscriber traffic, that he characterizes as being invaluable to generating audience for AOL sites, should they stop paying AOL every month.

    So, we have a potential loss of $60M to $120M in current access sub revenue for 2010. How are the ad sales folks supposed to come up with $$60-$120M in new incremental sales above and beyond the sure to be lofty targets for 2010?

    All of the sound and fury about AOL ad sales is nothing more than musical chairs. At the end of the day advertisers buy eyeballs. Unless Timmy can make the eyeballs jump dramatically, which is a total crapshoot, the convergence of declining access revenues and even healthy ad sales growth will not prevent the creation of a perfect storm for AOL tanking completely.

    Timmy and AOL are just like Punch and The New York Times. Declining readership (circulation) great free online content, huge operational cost structures and ad sales that can never close the huge gap between subscription revenues and the money it takes to produce the paper and distribute it.

    By the way, you can't escape by firing people and blaming them for not hitting the numbers when the business model is unworkable and outdated.

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  2. Who proof reads this before you put it up?

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  3. Client 9,

    If other people won't say it, I will – your rebuttal was excellent, on point and on target!

    Good analysis on how real subscriber revenue continues to bleed while "blue sky" talk about advertising is the topic of the day.

    It is great to hear from someone who appears to understand the bottom line when it comes to business – keep it coming!

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  4. Elliot Spitzer Monday, July 20, 2009

    Armstrong and AOL need to realize that calling 100+ sites Media-Glo or any other name is just that: a name. Tim is acting like AOL is the P&G of Online with all these brands to take up shelf space in the supermarket. The thinking goes that no matter what you pull off the shelf, P&G gets the sale.

    The dilemma here is how do you get people to buy your product when there are not just dozens of choices but tens of thousands of other products on that same shelf (the Internet)? Is AOL financially able to advertise on a level like P&G does? Not in our lifetime.

    CBS, NBC and all of the other TV networks are suffering just like the print media (declining audiences and escalating cost structures) in a universe of around 100 channels. How does Armstrong think AOL is going to surmount the same sort of challenge in a universe of tens of thousands of channels (sites)? AOL's ad sales will never be able to keep pace or stay ahead in that world.

    The only possible alternative is to start charging sub fees for AOL's high-quality content and hope people see enough value to pony up the cash. Along with ad sales, perhaps the gaps might be closed.

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  5. "Why don’t you ask Timmy how he plans to make up the difference between the revenue hemorrhaging with the access business and ad sales?"

    I'm no Tim or AOL defender, Elliot, but I think you're being just a wee bit dense: if you re-read the article you would see how he wants to vastly over-monetize remaining eyeballs: product upgrades (a whole 'nother slew of AOL software to deal with – I should just get out while I still can) and improving content and ad networks/targeting in general. I'm being very simplistic in my overview because 1) I'm very tired 2) you're being a wee bit dense and 3) Tim's plan probably won't work. But the way I see it, Tim's saying: "I want to keep the subscribers I already have, not continue to leech them; I plan to do that by offering new software and better content." Do YOU think that will work? Don't get me started…but that's his plan – I guess.

    He's still keeping plenty of cards close to his chest – very – that's a ..how do you put it…a Tim-ism, if you will…he talks in circles and non-committedly most the time. That might change once he unveils his more "definitive"plans; I hope it does because I'm getting pretty tired of his word games.

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  6. Elliot Spitzer Thursday, July 23, 2009

    Marah, you hit it on the head. Tim speaks in circles and corporate jive. Nothing concrete, he just alludes to things. To claim you are going to provide higher quality content says nothing. What does he think higher quality content really is?

    He plans to automate Ad.com so small mom & pop local advertisers can buy display while at the same time says he wants to up how much the display side is getting. Last I saw, Ad.com helped to crater pricing on the display side of AOL, when they were not even selling display! WTF?

    Google has been a one-trick pony, despite all of the products they have introduced. Whatever Google magic Bewkes thought Tim and his new crew were going to bring to AOL is a fantasy.

    Armstrong is demonstrating how little he really understands about 1) real leadership and 2) the ecosystem of advertising selling and buying outside of search.

    When was the last time Google ever sold a display ad?

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