Summary:

Luckily for internet-related conference organizers, *AOL* CEO Tim Armstrong doesn’t seem to be getting tired of answering the question: “Wha…

Armstrong at UBS

Luckily for internet-related conference organizers, *AOL* CEO Tim Armstrong doesn’t seem to be getting tired of answering the question: “What was wrong with AOL (NYSE: AOL) when you got there?” Answering that query from FM’s John Battelle at the CM Summit, Armstrong said that there was a flawed emphasis on driving gross revenue and skewed engagement metrics.

Since arriving, in addition to trimming the workforce and reorganizing departments, Armstrong says he’s tried to narrow the focus around those two areas. He’s also been trying to find a way to manage the AOL brand — which is well-known, but still often associated with the access business, not content and advertising. In finding the balance between promoting the AOL brand when it comes to content, Armstrong compared his company’s model to that of Disney’s: “Our brand architecture is looking like Disney’s, with some federated sites around the AOL brand, some around non-AOL satellites, like Engadget.”

On refocusing the way AOL measures success, the problem with over-emphasizing gross revenues and engagement through clicks means that you tend to have a take a narrow approach to content and advertising. For example, Armstrong said that when he got to AOL, there was a heavy reliance on image galleries, which would have a lot click-throughs, but users tended to do this by absently skimming and not really paying attention.

Similarly, this drive to simply push up barely considered engagement metrics was what drove the ill-conceived Bebo purchase, which Armstrong likes to remind audiences that he was not at the company when that decision was made. In the end, a poorly thought out integration between Bebo and AOL’s instant messenger AIM, tended to drive users away, making the social net a bad fit. Despite all that’s gone wrong with Bebo, Armstrong was careful to say that the process of whether to sell it or kill it hasn’t been completed. He said there was some interest from potential buyers, but nothing substantive to report yet. “If no one buys Bebo, potentially, we may shut it down.”

With Yahoo’s purchase of Associated Content this past month, there’s been some doubts about whether AOL will be able to fully develop its own freelance aggregator/content farm Seed.com into a competitive business. Armstrong sought to change some minds, by stressing the “strategic value” of that entity. Armstrong said that his approach to creating a journalism marketplace and AOL’s overall content plans was driven by his interactions with journalists. “Journalists I met were often the only people in the room who never had access to a lot of info, except what they already knew,” adding that they didn’t have ready access to data, not that they were necessarily deficient personally. “We want to give journalists the technology to better do their jobs,” he said.

In a further demonstration of his understanding of what journalists want, Armstrong said he welcomed reporters’ questioning of AOL’s ability to turn itself around. “We had a lot of bloggers aiming arrows at us after our Q1 earnings, but if you’re not getting arrows thrown at you, you’re not doing your job. “

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