Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Updated below: AOL’s Platform-A, plagued by slowing ad growth, might miss its revenue targets, Bloomberg reports Time Warner CFO John Martin as saying at Merrill Lynch’s investor conference. Up until recently, Martin said, ad revenues were growing like “a weed.” But lately, marketers have been pulling back. He told attendees at the Marina del Rey, Ca., conference: “It gives us pause in terms of our confidence to ramp advertising in the back half of the year.”
In August, Platform-A forecast that ad revenues would continue to rise through the end of the year. But now the ad slowdown has added to pressures on AOL, which has been dealing with the process of integrating the various ad firms it bought over the past year under Platform-A (NYSE: TWX). As a whole, AOL posted a weak Q2, reporting a 15 percent decline in revenue to $1.05 billion and operating income dropping to $230 million from $350 million, due to a 29 percent decrease related to the the loss of subscription revenue. As for the portal side of AOL, which just unveiled a revamped homepage, it is seen as one way to bring ad growth back.
— Marketwatch: On the bright side, AOL’s profit margins seem to have stabilized, Martin said. But margins are higher on AOL’s access side, partly because Time Warner hasn’t spent a great deal of marketing dollars there. In a separate Marketwatch item, Martin seemed to contradict Time Warner CEO Jeff Bewkes on whether or not the company may have overpaid for UK social net Bebo. In May, Bewkes repeated his supposition that the $850 million price tag for Bebo might have been too high — but if so, it wasn’t by too much. But Martin said Bewkes’ had been misunderstood. In part, Time Warner pursued Bebo because the company doubted that AOL would be able to develop with a social net on its own. Nevertheless, he said the acquisition was “riskier” than the company would ordinarily do.
Updated: Meanwhile, for *News Corp.* Peter Chernin, who spoke at the same conference, said that MySpace’s ad business is operating ahead of expectations for this year, and its digital ad business is performing better than the marketplace, though without giving any specific numbers. Earlier this year there was some hubbub about MySpace missing its revenue targets for last year, though not without caveats (see our note about that here).