Summary:

AOL (NYSE: AOL) today reported that its strategy to turn around its advertising business is definitely paying off, with sale up by 10 percen…

AOL (AOL)

AOL (NYSE: AOL) today reported that its strategy to turn around its advertising business is definitely paying off, with sale up by 10 percent on the year before. But while its figures beat Wall Street estimates that wasn’t enough to make up for declines in subscriptions and other areas, resulting in a net decline in revenues for Q4.

The growth of 10 percent is the third consecutive quarter of ads growth for the company, but AOL still has a ways to go before it can keep pace with wider online ad growth: according to figures from eMarketer, the overall U.S. ad market grew by 23.5 percent in the same quarter that AOL grew only 10 percent. Ditto for annual figures, where AOL grew ads for the year by two percent while the wider market grew by 23.5 percent to $32 billion.

eMarketer also points out that AOL’s current share of the U.S. display market is only at 4.2 percent, a decline from 4.8 percent in 2010 and 10.6 percent in 2007. Compare that to Facebook which had a share of 16.3 percent in 2011 (figures from comScore (NSDQ: SCOR) yesterday put that share at an even higher number, just under 28 percent).

Still AOL managed to exceed average Wall Street estimates as polled by Yahoo (NSDQ: YHOO) Finance: their figure was $0.16 per share, while in actuality it was $0.23, at the high end of analyst estimates.

Some of the figures from AOL’s Q4 earnings sheet:

– AOL’s Q4 revenues are still in decline but as AOL points out the decline is the lowest it’s been in five years. AOL reported revenues of $576.8 million for the quarter, down three percent on a year ago. FY 2011 revenues were at $2.2 billion, down nine percent on 2010.

– Quarterly net income saw a big decline over the last year: $22.8 million, down by 66 percent over the same quarter a year ago. However, for the full year, AOL has managed to post a big reversal on its performance a year ago, when it reported a net loss of $782.5 million; for FY 2011 it posted net income of $13.1 million.

– Global display revenues were up by 15 percent to $170.6 million, and third-party network revenues were up by 20 percent to $104.8 million: we’ve seen some interesting deals with AOL in the latter category, for example its agreement to sell ads for Bonnier’s Parenting.com.

– Search and contextual ads remain the smallest parts of the overall ad business and saw further declines this time around, too: they were $88.4 million for the quarter, a decline of eight percent.

– Subscription revenue was down by 18 percent to $194.6 million; despite the declines, still more revenues than AOL is getting from its display ad business.

AOL says that video continues to remain a growing business, as does its Project Devil branded advertising push and its local Patch service, which doubled its revenues, although AOL didn’t break them out separately.

Traffic for AOL’s content sites, under the Huffington Post Media Group, were able to offset declines at MapQuest and AIM, but that meant that overall traffic was flat.

Here’s a look at our own compilation of data to chart how AOL has progressed under CEO Tim Armstrong:

We will be speaking with CEO Tim Armstrong later today, which will hopefully provide some more color to these figures.

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