AOL: Q4 Advertising By The Numbers; Growth Not Expected Until Q2

AOL (NYSE: TWX) expects flat advertising revenue this quarter and Time Warner had to explain that during its earnings call, along with a lot of disquieting advertising numbers from 4Q07. Time Warner CFO John Martin provided most of the details in his prepared remarks and more came up during the Q&A.

Advertising revenues were up 10 percent year over year, to $620 million. Display advertising on AOL’s owned-and-operated network was up a mere 3 percent to $252 million. Third-party network revenue rose nearly 30 percent, to nearly $200 million. TWX invested $900 million in assembling Platform A last year; nearly half the growth in third-party advertising in Q4 came from acquisitions but but organic growth is strong.

Paid search: AOL made $171 million from paid search in Q407, only 1 percent higher than the previous year. Paid search in Europe — 20 percent of paid search revenue — declined by $8 million because AOL no longer receives guaranteed payments from Google (NSDQ: GOOG) for European search. U.S. paid search was up “mid-single digits” with AOL benefiting from positive pricing trends across the industry but experiencing lower use and lower click-thrus. More after the jump…

Flat times ahead: Part of Martin’s explanation: “First, advertising demand is continuing to shift to third-party networks. This is an industry trend. It

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