AOL changed almost beyond recognition over the course of two decades, not once but twice - and then again for a third time in 2015 when it was acquired by Verizon. When the original dotcom boom was at its peak in 1999, it became the first online company to cross completely into the offline world, using its sky-high stock price to buy Time Warner, becoming the world's biggest media company. AOL quickly became the scapegoat for the financial woes which followed, culminating in a staggering $100bn loss for 2002. The following years witnessed a dramatic slide in the online company's revenues as it struggled to transform itself from a subscription business into an advertising-funded portal. As a result it came as no surprise in 2009 when Time Warner finally confirmed that it would spin off the remaining business to shareholders. Independent once more, AOL struggled to prove its continuing relevance in a wholly transformed digital environment. It bulked up its content with the acquisition of the Huffington Post, but revenues continued to decline over the following two years. There was finally a turnaround in 2013, and revenues recovered in 2014 to $2.53bn. Finally, the following year, the business was acquired by Verizon for $4.4bn, forming the core of a new Verizon streaming media and digital advertising service. CEO Tim Armstrong continued to lead that business and a dwindling collection of AOL's subsidiary brands, including HuffPost, Techcrunch, Engadget, Autoblog and Moviefone. Yahoo too later joined Verizon's stable, but performance of both brands continued to decline, prompting Armstrong's eventual departure in 2018. Guru Gowrappan is now CEO of AOL, Yahoo and the other brands in Verizon's digital media division.
Capsule checked 18th January 2019
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Adbrands Daily Update 12th Dec 2018: Verizon's gamble on digital media hasn't gone according to plan. The group said it will write off another $4.5bn in the current quarter against acquired businesses AOL and Yahoo and their various subsidiary brands. On top of previous write-offs, that move will reduce the goodwill attached to those two deals - which had a combined value of $9bn - to just $200m. The main culprit is the continuing squeeze on digital advertising. Along with every other online company except Google, Facebook and Amazon, Verizon's digital division Oath is struggling to sell space. Its share of the digital ad market is expected to fall by almost a quarter year-on-year to to 3.3%. "These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business," said the company. The Oath brand will be dropped in Jan 2019 in favour of Verizon Media Group.
# Adbrands Weekly Update 6th Apr 2017: Oath. That will be the name of Verizon's digital media division when it completes its acquisition of Yahoo this summer. The new unit, to be headed by Tim Armstrong, will combine Yahoo and AOL and their 20 or so surviving subsidiary brands, like Huffington Post, Engadget, Tumblr and Flickr. As AOL CMO Allie Kline told Adweek, the new name isn't about swearwords - as non-Americans might have assumed - but about loyalty and allegiance. "When you look at the diversity of this set of brands, and you look at the one thing that connects or binds all of these assets and the people who work on them, it is a set of values we share.... It’s being deeply committed to building brands and not just aggregating content... An oath is one of the most long-term and profound commitments a human being can make. We wanted to be anchored by that, not just in the name but in the people who work on all of our brands."
Adbrands Weekly Update 21st Jan 2016: In an interview with online paper Business Insider, AOL's chief marketing officer Allie Kline admitted that she's considering a plan to ditch the long-established AOL brand now that the company is a unit of telecoms giant Verizon. "Are we going to keep the AOL brand or are we going to bring a new brand to market?" she said. "I actually don't think there's a bad choice, but we have to make the choice." The main concern is that most consumers still associate the AOL name with the distant past: 'You've Got Mail', dial-up fees and the disastrous Time Warner merger. What they don't think about is the company's more prestigious subsidiary brands like Huffington Post and TechCrunch. "If you ask me today, I could say, 'I feel very strongly about the AOL brand. It has a lot of legacy and meaning, and we shouldn't move away from it!'" says Kline. "But if we met tomorrow, I could be like, 'Yes! We need a new name!' It's a very hard needle to thread for us."
Adbrands Weekly Update 2nd July 2015: Microsoft made further changes to its online media operations, handing over the bulk of its display, mobile and Xbox video advertising sales to AOL, itself now a division of Verizon. In return, AOL will end a long-running partnership with Google next year, and will instead use Microsoft's Bing as its main search results provider. Microsoft is delegating adsales in its nine biggest markets - the US, Canada, Brazil, major European countries and Japan - to AOL; in others it will farm out the business to programmatic service AppNexus. Around 1,200 Microsoft staff will transfer to AOL (or leave). The financial impact will be comparatively small. Microsoft's share of US search will rise by about 1% to 21% and it will be around $350m better off a year as a result of increased search revenue and reduced costs.
Adbrands Weekly Update 14th May 2015: AOL's years in the wilderness appear to have ended. Telecoms giant Verizon has agreed to acquire the once-pioneering online company for $4.4bn, almost a quarter above AOL's pre-announcement market value. The key attraction for Verizon is AOL's sophisticated automated trading platform, which will be used to underpin the telecoms group's forthcoming streaming video service, expected to launch this summer. Though full details have yet to be announced, this will offer a mixture of paid, free and ad-supported content. According to Verizon CFO Fran Shammo, the new service will abandon traditional TV-style formats. “This will have nothing to do with what you do in your house,” he said last month. “Millennials consume news in ways you can’t even see on the TV.” Clearly it will also now incorporate AOL's content offering, including Huffington Post and Engadget. AOL CEO Tim Armstrong will continue to lead the business, for the time being at least. He said the combination of AOL and Verizon would create the largest mobile and video business in the US, with a scale to match Google or Facebook.
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