Media Curmudgeon

« The New Pricing Model For Media Content? | Main | »

December 13, 2007

AOL’s New Platform-A

Curt Viebranz, president of AOL’s Platform-A, announced the new structure of its Marketing Solutions group, and it’s a winner.

In an October 22 blog post, I wrote: “I know nothing about Viebranz’s qualifications to run one of the world’s biggest and most complex online sales organizations. In reality he might be just the right person. However, the perception internally and externally is because Viebranz is an old pal/colleague of Bewkes from their HBO days and that the appointment is a political one—a decision that smacks of White-House-like cronyism and one that also emasculates Falco.”

From the looks of the re-org announcement, I shouldn’t have been concerned. The new Platform-A structure will have three sales forces: The Marketing Solutions group will consist of a combination of the best of the old AOL Media Network sales force and some of the best of the behavior-targeting TACODA salespeople. This group will sell large (over $1 million), complex, solutions-based deals. Here’s what Viebranz wrote:

“Our first priority for next year will be to drive more money from the largest advertisers, including some that have not traditionally spent a great deal with us. And we must capture a significant share of the advertising dollars as they’re shifted from traditional to digital media. In order to accomplish this, Platform-A will need to take a unified approach, including a coordinated and consistent set of products, to our partnerships with these top advertisers and prospects.

“Going forward, Platform-A’s success will depend on developing deep and enduring relationships with these accounts, leveraging all of the considerable assets that we can bring to bear. We need to demonstrate our ability to work with agencies and advertisers to help them more easily harness the full power of digital media. Thus, we will provide large brand customers with coordinated access to the full Platform-A product suite, including the offerings of AOL, Advertising.com and TACODA. There’s a good reason for this approach: our top 75 advertisers account for nearly two-thirds of our revenues.”

The Advertising.com sales force will continue to sell remnant inventory from a huge network of sites and the newly named Ignite sales force will sell smaller, shorter-term, RFP-type business (under $1 million), primarily to agencies.

This is the right strategy, clearly stated. As new media people like to say, it’s clear that Viebranz “gets it.”

Some estimates suggest that the Ignite group should bring in revenue of about $100 million in 2008, the Advertising.com group about $300 million, and the Marketing Solutions group about $300 million. Add to these numbers the search revenue from the lucrative Google partnership, and AOL should meet its ad revenue targets for 2008.

However, AOL’s overall traffic is going down, even as it is trying desperately to upgrade and improve its content, which it is doing, and doing well and inventively. But the reality is that as AOL is an uncool Web 1.0 dinosaur whose traffic is steadily and irreversibly declining as dial-up subscribers defect to broadband. No amount or type of new content can reverse this audience downtrend.

The only way AOL can maintain or increase advertising revenue in the long run is to become a sales representative company that sells a network of sites in addition to the AOL brands. I do not mean selling the unused, remnant inventory like Advertising.com does, but selling integrated, highly targeted content like the Platform-A Marketing Solutions group does. Few websites can afford to have the type of experienced, knowledgeable, solutions-oriented, behavior-targeting savvy salespeople that AOL now has, so the vast majority of websites that have sales staffs would be much better off to fire or reassign their sales staffs and give AOL a generous commission to sell advertising on their sites.

Sites that make such a decision would save money on personnel (way too many of them are paying way too much for inexperienced, inadequate salespeople) and would get significantly higher prices for their inventory sold by a sales staff that can bundle their inventory with other compatible inventory on similarly targeted sites and serve behaviorally targeted ads.

I recommend that Curtis Viebranz take this approach, and the first website I would recommend approaching would be The Huffington Post, which currently has a sales representative deal with Barry Dillers’s IAC. ICA’s sales force doesn’t know how to sell the Huff Post’s inventory. In fact, the only thing IAC knows how to do is pay Diller an unconscionable amount of money.

I wish AOL well, but no matter how meticulously or strategically it rearranges the deck chairs, it won’t save the boat, which was floated on an old business model. It needs a new boat—a new business model. It might not be too late.

Posted by Charles Warner at December 13, 2007 05:24 PM

Comments

adambroitman at December 13, 2007 05:38 PM writes:

Post a comment