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AOL’s Armstrong: ‘Benefits Are Coming Into View’

AOL (NYSE: AOL) CEO Tim Armstrong offered a much more triumphant sounding note when he began the Q3 earnings call, seeking to convince long-suffering investors that his plan at turning around the company were finally “coming into view.” He pointed to the lift from integrating the big traffic driver Huffington Post as well as the roll out of more mobile content and the continued expansion of hyperlocal efforts around its Patch network.

The more confident tone was helped by the belief that the benefits of the traditionally higher spending in Q4 will continue to raise AOL’s display sales, which have been up all year.

Looking at the change at the top of AOL’s advertising operations in July, which saw Ned Brody get promoted to the top ad spot from his post as the head of the Group and Armstrong’s former Google (NSDQ: GOOG) colleague Jeff Levick get ousted (he quickly landed at Spotify as chief advertising officer), Armstrong said that it’s all been a matter of tighter focus.

“We’ve been very clean and clear on the focusing on top 500 accounts we deal with, particularly the top 100,” Armstrong said. Secondly, he pointed to the operational improvement in scaling the Project Devil premium display business and video ads. Lastly, Q3’s story was bolstered by attempting to build more analytics into the sales process.

Armstrong also briefly touched on something called “Project Neapolitan” into Patch in the last quarter and it now has over 5,000 advertisers across its 800 sites, which are on the way to becoming 1,000 sites over the next two months.

“We you talk to major auto makers, half goes into local and regional,” Armstrong said, saying that AOL will also be aiming more heavily at local retailers as the company works to make Patch profitable. Armstrong didn’t provide any clearer sense, however, when Patch would be evenly profitable, as opposed to the expectation that some parts of the network will do more than break even by the end of the year.

Hanging over AOL, and its closest rivals Yahoo (NSDQ: YHOO) and MSN, is the increasing dominance of display by Facebook. The trends have tended to be favoring social media and search for a long time, but Armstrong essentially said that there is still plenty of room for AOL to capture a healthy share of online ad dollars.

“Without commenting on Facebook specifically, I’ve met with a number of CMOs at major companies and the sense is that buyers are going with a few bigger partners” as opposed to spreading out the media buys more widely, Armstrong said. “That benefits AOL, Google, Facebook. One of the largest buyers expects to spend his ad dollars on the top 20 properties, mimicking the cable advertising world.”

Armstrong ended the call saying that there were no major acquisitions in the works, but there would be a new social networking tool coming in the next few weeks, but he offered no further hint as to what that would be.