AOL MediaGlow Gets A Good Start (TWX)

AOL’s plan to capture a large part of the online ad market is to organize a number of brands, some of which don’t have the AOL name, into a new umbrella that the company calls MediaGlow.

The knock on the strategy is that AOL’s traffic went up last year, but its ad revenue went down. But, AOL is not alone in that. Barry Diller recently said that display advertising at his properties was hurt last year and was off about 50% in January. The open question for AOL is whether it is well-positioned for when the display market springs back as an economic recovery begins.
A look at the most recent data show that AOL had sharp increases in traffic in the fourth quarter of last year, but ad revenue dropped 18%.

AOL has decided to add content sites that do not have the AOL name. It is diversifying away from a brand that belongs to the 1990s and creating new brands that develop audiences of their own. The best example of this is probably TMZ.com, the popular entertainment site. Over 99% of the people who visit it probably have no idea it is part of AOL.

AOL has also launched a small navy of blogs. Looking at the Technorati blog measurement service, many of these websites are extremely large, and, to the untutored eye, the have no attachment to the old dial-up brand.

Among the top 40 blogs as measure by Technorati are Engadget, an AOL property, followed by BloggingStocks, Gadling, TMZ, AutoBlog, TV Squad, The Unofficial Apple Weblog, and Download Squad. Blogs have a very reasonable chance to continue to be the growth sector in online content. Huffington Post, CNN Political Ticker, and WSJ Washington Wire are all among the most widely-visited blogs in the US. But, AOL dominates the list of the largest properties.

AOL has plans to roll out more of these large vertical sites, some thirty or so this year. If the majority of these have the level of traffic success that AOL’s current “non-branded” sites do, AOL will be selling marketers broad reach on the one hand and strong and focused content sites on the other. The targeted sites should demand higher ad rates.

It’s a good spot to be when Internet advertising hits a floor and starts to bounce back up.

Douglas A. McIntyre  24/7 Wall St. editors write for Blogging Stocks