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AOL, the company that introduced millions of people to the Internet, has tried to reinvent itself many times. The latest effort—like those before it—doesn’t seem to be going very well.
On Tuesday, Jeffrey L Bewkes, the chief executive of Time Warner, AOL’s parent company, acknowledged weakness in the business and said he was open to combining AOL with another company—“whatever configuration makes it the strongest and the most valuable.”
AOL still enjoys many advantages that most Companies can only dream about, from a prestigious brand name to an enormous revenue stream ($5.2 billion in 2007, down 33% from 2006). AOL’s websites attract 112 million visitors a month, and 9.3 million Americans still pay the company for Internet services. But these days, no Internet portal can succeed without a thriving advertising business, and that is where AOL is trying to shore itself up.
The goal is to expand AOL’s advertising networks, which sell ads on thousands of websites, by knitting together the seven advertising and technology Companies that AOL has purchased and rolled into Platform-A.
AOL’s overall revenues have declined as it has lost dial-up access subscribers. Its advertising revenues were $2.2 billion in 2007, up 18% over the previous year, but the pace of ad revenue growth has slowed each quarter, even as AOL bought Companies like the ad network Tacoda.
“I think it’s a great vision, but the devil is always in the details,” said Sarah Fay, chief executive of Carat and the US unit of Isobar, agencies that are part of Aegis Media Americas. “It will all be in the execution...
—NY Times / Saul Hansell & Louise Story
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