Merrill Lynch Conference: AOL Pitches Its New Strategy To The Street


After a full day of touting the changes afoot at AOL, CEO Randy Falco and COO Ron Grant took their pitch to Wall St., presenting at the Merrill Lynch Media & Entertainment Conference. Falco kicked things off, arguing why AOL was in a natural position to profit from growing CAGR in online advertising. He noted that while page view growth is most rapid on the edge of the net (blogs, social nets), online ad spending is becoming more concentrated, as ad buyers go through a narrower set of ad networks. Thus it makes sense to position its advertising assets (what’s now known as Platform A) as a vast network offering access to the broader web. Falco then offered a slide showing’s broad reach compared to other ad networks (though this left the question of why they’re not making more money). Also, he wouldn’t get into specifics about when the company will start growing its online ad revenues at a rate closer to the industry’s growth — just suggested that that would happen at some point.

Following Falco, Ron Grant took the opportunity to play up the value of AOL’s own properties. He claimed strong growth at many of its verticals (finance, shopping), as well as services, like IM and email. Also, took pains to show that AOL ‘gets’ the new web and that the new AOL is the antithesis of the walled garden that it once was. As an example, he mentioned that you can now check your AOL email from an iGoogle (NSDQ: GOOG) page. Also, promised continued APIs to facilitate mashups.

— No plans to sell the domestic access business. Still has 9 million customers generating plenty of page views.

— Will continue to invest in search, but with more of a focus on stuff like video search (Truveo), rather than pure text search, where it has a partnership with Google.

–“We have stemmed the tide of people leaving us”

Update: Some stats from the presentation (Windows Media):

–Email: 40 percent of AOL’s usage; 2 percent pageview growth since relaunch three months ago.

–AOL Finance: pageviews up 5 percent in month after relaunch.

–Total site traffic: 114 million domestic unique visitors; 231 million global unique visitors; 52 billion quarterly domestic pageviews.

–Investments: $500 million towards acquisitions over last 12 months. $650 million towards internal development in 2007.

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