AOL Circus Show

by nikiscevak on March 12, 2008

The New York Times has some great reporting (no that statement is not a tautology) today on AOL and the firing of Curt Viebranz. The juicy bits:

“Soon afterward, Dave Morgan, a founder of Tacoda who had stayed on at AOL, tried to persuade Time Warner to sell Advertising.com in order to avoid conflicts between the fast-growing network and the rest of the company, according to a senior AOL executive, who was given anonymity to disclose details about internal matters. Mr. Morgan has recently left AOL.

Ms. Clarizio had opposed buying Tacoda, saying that Advertising.com could build its own ad customization technology, the senior executive said. The leadership of other companies that AOL had acquired — like the ad network Quigo — chose not to join AOL, so by the end of last year, a schism emerged between the people from Advertising.com and those from Tacoda.”

There are two factors that must be isolated: one is that AOL is spiraling out of control (their own annual report that was published a few weeks ago says they expect online ad revenue to go *down* in Q1). And the second is that Ad.com had been propping up the sordid sight for years.

In fact, Ad.com is probably one of the most successful acquisitions in the Internet industry period. Ironic, given that AOL itself is the most unsuccessful Internet acquisition of all time.

There are two current news items that are at work within Platform A: The first and most important is that the University of Phoenix junked its exclusive agreement with Ad.com. Think that doesn’t matter? It was worth roughly $200m/year. That’s the bad news. The good news is that Ad.com can now work with other online education firms.

The second is the drunken beads-on-bourbon-street-like string of acquisitions the firm has made of every ad network under the sun. One, Tacoda, came with a few large egos.

Tacoda was a success for its backers but they had to wait a long while for the investment to bear fruit.

Initially Tacoda was an ad server that allowed publishers to show valuable ads on low value parts of a site by tieing the past behavior. This didn’t work for a number of reasons. One, the publisher had zero idea about available inventory or how to forecast it. Two, the ‘behavior’ captured was mostly low value (just because I am interested in reading about traveling to Brazil does mean I am ready to book a trip on Expedia).

They ‘paved’ the way in behavioral targeting but only on the conference and trade publication circuit. They talked about brand advertisers and the ‘shift to the Internet. Meanwhile the more mathematical minds at Ad.com were actually doing it with Netflix and Vonage direct response offers and making money for it. Tacoda had a great brand association with behavioral marketing in the industry but Ad.com were actually iterating and scaling and you know, making money from it.

So it was no wonder they two clashed when they were forced into the same division. Despite scores of stupid decisions, I am actually glad to see Ad.com won out over Tacoda. Results versus Talking.

With that said, this all makes a shit of a difference. AOL’s core owned and operated properties are decaying at a faster rate than a Lindsay Lohan new year resolution to stay sober.

But if they just hang on long enough to dump the mess into Microsoft’s hands….

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