August 20, 2007 | Monday
AOL’s Randy Falco: Struggles are a “hiccup”
By Jackie Danicki - Blogger in Marketing |News |Search Engines
The stories making the rounds about AOL all seem to give the most important information in the last paragraph, so let’s avoid any misunderstandings here: AOL did see growth in their online display ad revenues last quarter, to the tune of 16 per cent. This was below the industry average of 21 per cent.
With that out of the way, it is still difficult to agree with AOL chief Randy Falco when he claims that the company’s trials are just a bit of a “hiccup”. Here’s why.
AOL is, like many companies at this moment, having to re-invent its business model. Dial-up ‘net connections are not going to make anyone much money in 2007. Just this one challenge on its own constitutes a sizable mountain to scale, especially in the highly competitive tech and advertising arenas.
More to the point, AOL’s parent company, Time Warner, is - as one industry analyst puts it - ”the most dysfunctional of families”. Opportunities for revenue creation and growth abound in a company as diverse as Time Warner, but at times they seem awfully good at dodging those opportunities.
For example: Last year, execs at popular US sport magazine Sports Illustrated proposed to AOL that the two Time Warner companies combine their efforts and build a major sports portal. AOL told SI to, in essence, sod off. So SI took its business to Yahoo, and hammered out a deal that worked for both, leaving AOL in the dust completely.
There was also loud chatter last year from analysts that Time Warner missed the boat by not acquiring YouTube out from under Google’s nose. It would have been an effective platform for a re-launch of sorts for AOL and its ad sales mission.
The point is that AOL is not like other companies in its arena, as it is not just playing catch-up with the big boys, but is trying to effect a successful metamorphosis of business model. If AOL is not capable of talking to other divisions of its parent company and seizing natural chances for triumph, it is questionable whether it will ever recapture past glory.
It would have been reassuring if Falco had addressed the unique and immense challenges faced by the company he helms, acknowledging the difficulty of the task at hand and expressing enthusiasm for the fight. The evasion and denial he issued instead is, to put it mildly, not encouraging.
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