Programmatic Grows To 37% Of AOL's Ad Revenue

AOL Q3 earningsCEO Tim Armstrong thinks AOL's bets on programmatic are paying off.

Programmatic grew to 37% of non-search ad revenue, compared to 12%. Forty seven percent of revenue from AOL's network Advertising.com was programmatic, compared to 18% during the same period last year. Advertising revenue grew 18% YoY to $473.4 million.

Armstrong attributed the increase to larger shifts in the marketplace from network buys to programmatic buys and heralded the "mechanization of Madison Avenue" as one of the "quantum changes" in the industry over the past 20 years.

"This is a fundamental resetting of how Madison Avenue is going to work," Armstrong told AdExchanger. "All the customers I knew are moving to programmatic more quickly than they did a year ago,” he said.

He emphasized that AOL has positioned itself to be in the right place at the right time for this change.

"We see powerful trends from every one of our programmatic offerings: Adap.tv, One and Marketplace," Armstrong said. AOL is focusing on being a platform company, with scaled distribution, scaled content and scaled monetization.

To focus on "scaled" content, AOL said it would focus more on its largest brands, with smaller ones receiving decreased investment or being shuttered.

At the same time, investments in mobile and video continue to increase. Along with programmatic, these areas experienced over 100% growth year over year.

AOL is positioning itself to capture both TV budgets and is focused on the linear TV market, signing on ten clients. "Our thesis in marketplace is to help both sides [supply and demand] transition to online," Armstrong said. "The second thing, is with both sides there are yield maximization opportunities."

"It's really about the bridge that's being built between TV and video. That means advertisers need to bridge their campaigns and analytics," Armstrong said.

With its Convertro and Adap.tv acquisitions, AOL plans to help both with the piping for video as well as attribution. "[Advertisers] are looking for ability to tie together digital and TV, and the ability for them to link up attribution and ROI measurements with automation."

Armstrong said its cross-device linking has an efficacy of 93%. The solution competes with Facebook's people-based marketing, Armstrong said.

Almost half of AOL's traffic arrives through mobile devices. Over 50% of advertisers buy AOL inventory cross-screen, so an ad could appear wherever an advertiser finds a consumer.

AOL said there is both room for more programmatic players in the industry, discounting any competitive threats, and that it has a lead far ahead of other players. "In the ad platform business, having a complete stack is very important, and we’re one of two people with a stack right now," Armstrong said.

 

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