8 Comments

Summary:

AOL is buying three companies — TechCrunch, 5Min, and Brizzly — for a rumored $100 million. AOL is trying to regain its preeminence in tech-land by focusing on building media brands and platforms that help other media, CEO TIm Armstrong tells us.

0717_tim-armstrong-aol_398x206


This week must count as the best and the worst week for AOL CEO Tim Armstrong. Worst, because a breaking story about AOL’s pending acquisition of TechCrunch forced him to get on a cross-country flight to San Francisco, only to head right back to New York where he was set to make an announcement at an industry event. Still, it was one of the best weeks since he joined, because the TechCrunch acquisition got the world’s attention on AOL; the stock jumped nearly 3.2 percent yesterday; and it’s up 3.5 percent today.

It helped that Armstrong bought two other companiesBrizzly, a San Francisco-based social media company and 5Min, a video distribution platform. In total, these three acquisitions cost the company over $100 million, according to The Wall Street Journal. In between his flights and meetings, Armstrong called me for a very brief chat, and we talked about AOL’s strategic game plan.

Armstrong’s Plan

“Our strategy is to invest in as many brands as we can: brands that cut across devices and distribution channels,” he said. From TechCrunch to Engadget to Moviefone, AOL wants to establish brand beachheads on the Internet, Armstrong added.

In addition to brands, he said that AOL also wants to establish platforms that can be used by other content companies. The three platforms he has in mind: a communication platform, an advertising platform and a content platform.

When asked about his company’s video strategy, Armstrong played it coy and said the plans will be revealed in time. Tim pointed to the company’s recently announced video-serving technology, video production technology they recently acquired, StudioNow, and now, 5Min.

Brizzly, Armstrong said, was a way for AOL to acquire some top-notch social media talent. Brizzly founders, who include former Googler  Jason Shellen, will help sprinkle social pixie dust into various AOL products. “Brizzly is more about talent ,and our universal strategy is to make AOL fit into people’s social life,” Armstrong said. I asked him why AOL didn’t acquire Mashable, a weblog the company been linked to in the past, he said, “TechCrunch was a clear leader in breaking news and had scale in the category and we believe in their brand.”

More Mergers Ahead?

AOL is a two-tier business model, especially as it starts to distance itself from the fast-dying dial-up business. One arm of AOL focuses on media brands, while the other focuses on building platforms for others.
Brands:
Engadget, Moviefone, MapQuest, TechCrunch
Platforms for Others
  • Communication — AIM, AOL Mail
  • Advertising — Ad.com, Advertising.com, Video Ad-Serving Technology
  • Video – StudioNow (production), 5Min (distribution), video ad-serving (monetization)
  • Content Production Platform: Seed, Patch

“For the most part, we are a build-first company,” Armstrong said. “We will use M&A if we believe that is what is needed and it helps us get brands and helps expand our platforms.” While he didn’t say as much, I suspect AOL is going to be on the prowl for more small acquisitions that help the company expand its footprint.

One of the biggest concerns I have with AOL (and others like them) is that it’s innovating less on advertising. The growth of social commerce and emergence of new mobile devices is going to redefine the very meaning of large-scale advertising. It’s precisely the arena where Armstrong and his troops should be focusing their attention.

“The socialization of ads is a trend we are keeping an eye out for,” he said. AOL, like others, is looking for ways to scale the opportunities of transactions and at the same time lower the time to transactions. A big acquisition or two in this arena can’t be ruled out.

Related research from GigaOM Pro (subscription req’d):

  1. Didn’t Yahoo! try to jumpstart its game by buying a bunch of young social platforms? What have Delicious, Flickr, Upcoming.org, and blo.gs done for them since?

    Share
  2. Just as the the shift from newspapers to Radio to TV in the last century changed the consumption style for information and entertainment, This century is going to experience the same transition in the TCP/IP world.

    The internet today is predominantly text. And all the brands that Tim is talking about will eventually evolve to clearly distinguished formats for specific audiences. Search will still be an important part – but brands(which are really audience focussed platforms) are going to be more important than they are today. Products like Google TV will only help further polarization of the audiences and hence help focussed brands.

    Share
  3. Will the 3 people with AOL accounts stand up?

    *crickets*

    We all have AIM accounts, seeing as they won’t let you delete them, but to me all AOL is = a bunch of discs in a landfill. They tried to mass send a CD to everyone back in the good ‘ol days, now their plan is to buy things that people like, over-market them, and water them down to the point that noone cares anymore. Like the cds of yesteryear all these projects that they are mass buying will fail.

    When will Yahoo and AOL realize that they are dead? I had a good laugh, I was helping my aunt out with her computer, and she had a JUNO account still, and I was honestly shocked…I basically live online, didn’t even know they were still around. With the Google’s of the world the Yahoo, AOLs, and Junos are nothing more than afterthoughts, or background characters at best.

    Good luck to TechCrunch, I was never a huge fan, I’m sticking to Giga.

    Share
  4. [...] Tim Armstrong: AOL is Brands & Platforms – GigaOM [...]

    Share
  5. [...] the TechCrunch brand can give AOL some cred it couldn’t necessarily get on its own. He also told GigaOM’s Om Malik that he wants to begin developing platforms in communication, content and advertising for other [...]

    Share
  6. [...] built a walled-garden social network that hints at the future of social commerce. AOL made some acquisitions, but they’re pretty squarely in the traditional online media space. You can talk about the [...]

    Share
  7. [...] Armstrong described in a recent interview with Om, the company is trying to rapidly build a content and advertising business while the bulk of its [...]

    Share
  8. [...] we can: brands that cut across devices and distribution channels,” AOL CEO Tim Armstrong told me in a conversation last year, “We will use M&A if we believe that is what is needed and it helps us get brands and helps [...]

    Share

Comments have been disabled for this post