AOL has also lost share in the overall domestic digital ad market in recent years. The company went from a 3.3% share of all U.S. digital ad revenues in 2010 to a 2.8% share in 2011 and just 2.5% last year, eMarketer said. Yahoo remains No. 2 behind Google in terms of market share -- Google accounts for more than 41% of all digital ad revenues in the U.S., eMarketer estimates -- ahead of Facebook, whose share rose to 5.8% in 2012.
Armstrong attempted to blunt that present reality by pointing to investment in the AOL advertising stack and its content businesses, including HuffPost Live, its video news channel, and its stable of websites like Techcrunch and Engadget. "Before, the company was focused on commoditized ad units, but we've moved to video, which gives us access to higher-CPM, higher-margin brand dollars. On the managed service side, we're providing white label services to agency trading desks. That's a business we weren't involved in two years ago."
Expect more white label solutions for agencies and publishers over the course of this year, Armstrong said, though he didn't delve into specifics. Keeping his eye -- and that of restive analysts and investors -- on the future, Armstrong discussed the influence of programmatic beyond PC-based display ads to encompassing not just mobile, but TV ad budgets in future years. The message is that sticking with AOL will mean that despite bumps in the road -- a charitable characterization of its display performance last quarter -- the dividends and the higher margins will certainly materialize.
"Estimates of the share of ad dollars flowing into [programmatic] range from 7 and 20%," Armstrong said. "The point is, anything that can be machine traded, will eventually go in that direction. TV ad budgets will migrate to programmatic and those buys will be high-value, high-CPM brand dollars. And we're positioned to capitalize on that."
In the meantime, as the industry awaits TV's programmatic moment, AOL will continue to develop its mobile ad capabilities within a programmatic framework. Here too, Armstrong and COO Artie Minson noted consumer usage has well out-paced ad spending. But they believe they can close the gap with increased focused on mobile targeting that doesn't rely on PC-based cookies, especially since Apple's iOS doesn't permit these kinds of tracking tools.
"There's an identity war going on right now," Armstrong said, referring several times to an article in The Economist this week on the business of data mining and European regulation. "We understand the data of targeting and formatting and are working on cookie-less targeting," Armstrong said. "And we're going to be able to do more targeting without cookies in the future."