Hearst Adopts AOL ‘Large Format’ Ads

As AOL (NYSE: AOL) prepares for its Q1 earnings on Wednesday morning — and the expectation that it will have reduced declines in display ad revenues in its first quarter with the Huffington Post under its wing — the company is laying some groundwork on its premium, webpage takeover ad serving system, Project Devil. Case in point: the announcement that Hearst Magazines Digital Media has become the first third party to rollout the ads created by AOL display unit Pictela.

AOL bought Pictela, a high-def display ad tool for crafting large-size, interactive display ads, last fall. The acquisition was timed for the complete rollout of Project Devil.

Two months ago, Project Devil got the approval of the Interactive Advertising Bureau as a “standard” online ad format.

Hearst will use Project Devil for ads across its network of magazine sites, including cosmopolitan.com, esquire.com, goodhousekeeping.com, marieclaire.com, redbookmag.com and seventeen.com.

Procter & Gamble is one of the first marketers to take advantage of the so-called “Portrait” ad units that’s within the Project Devil system. For several years, web publishers have been trying to shift online to a more lucrative branding medium from a low-cost direct response medium.

The idea of large-size ads is that they related to eye-catching magazine ads or TV spots: you can’t avoid them, and if you’re receptive to whatever is being sold, consumers might even find them more attractive than basic banner ads, which rely on clickthroughs — which are miniscule.

Over the past few months, AOL CEO Tim Armstrong has asked for patience as the company has overhauled its ad sales system and team. It’s been difficult for investors, who have seen AOL consistently report double-digit display declines rivals Yahoo (NSDQ: YHOO) and Google (NSDQ: GOOG) benefit from the turnaround in online ad spending. It’s still probably too soon for AOL to erase the declines and that patience is surely wearing thin. But if Hearst and P&G, a bellwether advertiser, can inspire other publishers and marketers to take a chance on Project Devil, AOL should at least be able to buy itself more time and — it’s possible — make good on Armstrong promises of building a business on premium ad sales. Release