Web Portal's Changes Are a Bid to Keep Up With How People SurfWhen AOL in 2006 ditched its subscription service in favor of an advertising-based model, millions of subscribers deserted the site. Now, AOL is making its biggest push yet to win them back.
The new AOL.com will let visitors access e-mail from outside providers like Google and Yahoo and will include updates from social-networking sites.
In a bid to remain relevant, AOL on Wednesday is unveiling a new home page as well as a slew of Web sites aimed at women, pop-culture addicts and parents of gamers. The revamped AOL.com will for the first time let visitors access email accounts from outside providers like Google and Yahoo and will include updates from major social-networking sites and automatically personalize content for users.
The changes are an effort to recalibrate AOL's portal model with the way people use the Internet these days. In recent years, Web traffic has fragmented across thousands of sites and people often use multiple email accounts. But AOL was rooted in an era when most Web surfers did very little actual surfing, choosing instead to remain within the confines of a single gateway (or portal), as they read the latest news headlines, checked their horoscopes, shopped and sent email.
AOL still aims to be a hub of sorts, but one that serves as more of an entry point to the rest of the world than a self-contained content bubble. Other portals, including Yahoo and Microsoft's MSN, also provide links to third-party sites, but not access to accounts on other email or social-networking sites. AOL's new automatic-personalization feature -- where a person, for example, who looks at finance sites frequently will see finance content news featured more prominently -- is also unique.
AOL is hoping to draw traffic to the site by promoting it on its other sites as well as the network of sites where the company sells ads. But even if AOL is able to increase traffic, the big question is whether the company will be able to translate those new visits into ad dollars.
Anemic ad sales have been a big drag on the earnings of its parent company, Time Warner, which has promised that AOL will start turning around during the second half of the year. While the rest of the online ad market climbs at a healthy clip -- increasing 20% in the U.S. in the second quarter -- advertising growth at AOL stalled at 1.5% in the second quarter following four previous quarters of deceleration.
In particular, AOL's ad sales growth was dragged down by a 14% slump in display ads, graphical ads that border a Web page. These ads typically are the main unit sold on a portal's home page and can fetch some of the highest prices in the business.
"It is really important for the company to turn around what has been a really shockingly bad display advertising number," says Michael Nathanson, an analyst at Bernstein Research. "The Street is really concerned if AOL can ever turn around. For the past year, we have been hearing about how traffic is not the problem, monetization is. I don't need to be convinced that traffic can return. I just want to understand how they can convert that traffic to advertising growth."
In an effort to address that issue, the new AOL.com will start allowing types of ads on the home page that marketers find more desirable. It will prominently feature a photo gallery and video player, which can offer ad formats that are particularly interactive and obtain higher ad rates than other more static ads. Last month, AOL also started selling a new ad format on its home page that is double the size typically offered by portals.
Samsung Electronics was among the first advertisers to buy the new large home-page ad. The South Korean company says the ad, tied to an Olympics ad campaign, achieved its goals. "The size was large enough to be disruptive. You couldn't overlook it like a banner ad, so it did have high impact," says Kim Titus, a spokesman for Samsung.
AOL drew 111.4 million unique U.S. visitors in July, down slightly from the 113.9 million people that visited the site during that month last year, according to comScore Media Metrix. But the site is still fourth-largest Web site in the U.S. (by that measure). With its relaunched home page and new content, AOL is trying to get current visitors to its home page to stay longer and also broaden its appeal to win over members of some of the services that AOL will now be including on its home page, like Facebook or Yahoo Mail.
The revamp also marks the first major attempt by AOL to integrate Bebo, the third-largest social-networking site, which AOL acquired this year for $850 million. The new design will give consumers access to a number of different social-networking sites, including News Corp.'s MySpace and Facebook. The acquisition has drawn much criticism. In June, Time Warner Chief Executive Jeff Bewkes called the move the "riskiest acquisition that we've done."
By: Emily Steel
Wall Street Journal; September 10, 2008
