AOL and its Content Strategy

May 24, 2010

AOL turned 25 today, prompting Chief Executive Tim Armstrong to make the rounds with co-founder Steve Case to celebrate the milestone. AOL has a colorful and much chronicled history, which we won’t go into detail here. What is most interesting to this reporter is  not AOL’s  past but rather its plan to pitch itself forward  as a content company just at the point when traditional media — we’re  looking at you newspapers –  are undergoing wrenching operational changes.

All of this is to say that content, especially good local content, is expensive to produce even when the plug has been pulled from the printing presses.

Yet AOL executives believe there is a vein to mine and have been snapping up professional journalists while casting wide nets to capture “citizen reporters” eager to get their names out by covering the goings-on and activities at the neighborhood level. AOL is hiring expensive professionals to complement inexpensive user-generated content tied to search engine optimization. Ad dollars, the company hopes, should follow thanks to its technology platforms that AOL believes can maximize ad revenue.

AOL Chief

When asked about advertising opportunities going forward during an interview today, Armstrong relayed this story –days after upbeat broadcast executives unveiled their prime time programming to advertisers known as the upfronts.

Armstrong had met with one of of the top 20 advertisers in the world last week and said,  “This was the first year that they have actually planned digital before they did their TV upfronts. I think that is a trend happening in the industry. … [The] industry analysis is probably undercounting the fact that you are seeing fundamental shifts that people are starting to plan digital before they plan the TV upfronts. My guess is there will be more and more pressure in that direction going forward.”

Case, who is now the chairman and CEO of Revolution, added that more and more people are spending time online at the expense of reading magazines and newspapers or watching TV.  ”Obviously advertising is going to track that audience not just the number of people using it but the amount of time they are using it. You can debate how quickly that will happen but you can’t debate inevitably the dollars will shift towards the digital medium because that is where consumer attention has shifted.”

All true as more people turn online to get part of their media fix.  Consumers, however, aren’t exactly lingering at content sites either. The average time spent for users at AOL News was 16 minutes and 49 seconds for the month of  March, according to Nielsen Online.  (The average time spent during the same month was 14 minutes and 32 seconds at Yahoo, roughly 26 minutes at CNN, and almost 15 minutes at NYTimes.com)

Armstrong also answered questions regarding Yahoo’s acquisition of Associated Content (Armstrong was an original investor in Associated Content when he was at Google):  “A year ago when I got here nobody was investing to keep up with AOL and I think now you are starting to see our major competitors really start to think about what their companies are and a lot of them are attracted to our strategy.”

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[...] (A great example of this is AOL’s new push to reinvent itself as a content provider.) [...]