AOL Regroups Blogs, Launches AOL Tech Network
AOL launched what they’re calling the AOL Tech Network this evening. It’s a grouping of existing blogs - the Engadget sites, Switched, TUAW and Download Squad, under a new tech content group.
Unike AOL Games, AOL Entertainment and other sub brands, AOL Tech is being branded without “AOL.” A new link on the AOL home page links to Switched, which will now syndicate in content from the other blogs in the network.
This is party a streamlining of the organization, but it’s also a way for AOL’s sales team to pitch a tech brand to advertisers that has a big footprint. The combined blogs bring in nearly 5 million combined monthly visitors, making it about twice the size of Wired and in the same ballpark as Yahoo Tech.
Of course, 100% of the Switched content is coming from blogs, unlike those other sites.
Engadget has more, and talks about a new design as well.
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In Another Surprise Twist, AOL-Yahoo Deal Said to Be Close At Hand
Things are moving fast in the Yahoo-Microsoft drama. All the different forces are aligning for an endgame. The latest twist: The WSJ is reporting that Yahoo is close to signing a deal to combine with AOL.
This at the same time that Yahoo is doing a limited test to place Google ads in its search results. Meanwhile, News Corp, which Yahoo once hoped would be its white knight, is said to be turning on Yahoo and talking to Microsoft about joining its bid. Obviously a lot of balls are up in the air right now, and anything is possible.
Here is how the AOL-Yahoo combination is shaping up, according to the WSJ:
Under the terms being discussed, Time Warner would fold its AOL unit into Yahoo and make a cash investment in return for about 20% of the combined entity, the people said. The deal, which wouldn’t include AOL’s dial-up access business, would value AOL at about $10 billion. As part of the deal, Yahoo would use the Time Warner cash and additional funds to buy back several billion dollars worth of its own stock at a price somewhere in the middle of the range between $30 and $40 a share
Tellingly, that $10 billion valuation is half of what AOL’s business was pegged at when Google invested $1 billion for its 5 percent stake in AOL a little over two years ago. What we are witnessing is all sorts of contortions on both sides to make the numbers work. We’ve believed all along that Time Warner will put an offer on the table, but it will be difficult to make it pencil out, especially if an AOL-Yahoo combo is up against a three-way Microsoft-MySpace-Yahoo deal.
Each of these potential deals would create integration nightmares, but a three-way tie between Microsoft, MySpace, and Yahoo would create an entity with so much traffic and advertising inventory that it might not matter. The chances of such a complicated deal going through, though, are small. The most likely outcome is still Microsoft buying Yahoo, and this is all just fodder for the negotiations.
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AOL Launches Mobile Portal Powered By Cellufun
AOL has launched a mobile phone gaming portal powered by Cellufun.
The games are available via wap.aol.com and are provided on a free, ad supported basis, and no downloads are necessary. Advertising inventory will be sold by AOL’s Platform-A’s Third Screen media.
AOL will offer games including Cellufun’s Call of the Pharoah, a game that relies on a social networking “pyramid scheme” to finish it.
New York based Cellufun was founded in 2005 by two former Wall Street security experts Arthur Goikhman and Steven Dacek and has attracted 5 million unique visitors to their games in the past year and 500,000 registered users.
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Smelling Trouble Behind AOL’s $850 Million Bebo Deal
When AOL bought Bebo for $850 million last week, CEO Randy Falco and COO Ron Grant believed the social network would help save AOL from its downward spiral. Social networks are where pageviews are generated these days, and AOL’s own attempt to turn AOL Instant Messenger into one (via Aim Pages) was a dud on arrival. Bebo, with 22.9 million unique visitors in February and 10.3 billion pageviews (per comScore), was growing and it was for sale. Even though AOL is trying to transform itself into an advertising network, it makes much higher margins on the ads it places on its own pages. The formula for its business is pretty simple: Unique visitors X page views = advertising inventory. If social networks are the future of the Web, AOL needed to own one.
But was Bebo the right one, and did AOL pay too much for it? Those are questions that other AOL executives below Falco and Grant are asking themselves, reports Silicon Alley Insider. The concerns of the senior executives who actually run AOL (and reportedly were not consulted on the top-secret acquisition) include: the general difficulty of making money placing ads on social networks (see Google’s missed quarter), “flattening traffic growth at Bebo” (see chart below), overly-rosy revenue projections for Bebo that might have been three times too high, and the likelihood of losing Bebo’s most talented employees (the founders are already out of there).
From my own sanity-checks with sources, there is definitely the sense that AOL was not Bebo’s first choice. Initially, it was aiming for a valuation above $1 billion. But then the ground started falling out beneath it, and AOL’s $850 million offer started to look real good. AOL was a desperate buyer. Even if it bargained Bebo down on price, it may still have paid too much. Bebo’s growth is indeed flattening relative to other global social networks like Hi5 or Friendster. And while social networks generate a lot of pages, they are not yet particularly valuable pages.
There is a silver lining here, though. If AOL can use its targeted advertising assets (Advertising.com, Quigo, Platform A) to make that Bebo inventory pay out, it will surprise everybody. And that will be good for Platform A because it then will be able to grab more advertising business from other social networks. (That is, if New York State does not outlaw targeted advertising before then). The likelihood of that happening is not great, but AOL employees need at least a glimmer of hope to keep showing up to work every morning. (I do what I can).
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What Media Company Gained the Most Market Share in 2007? (Hint: It Starts With a G).
When it comes to market share gains in advertising dollars, Google outstripped every other media company in 2007, whether you look at the Web, TV, print, or radio. Earlier this morning, Henry Blodget compared the advertising revenues of 17 major media businesses (including News Corp, Time Warner Cable, Viacom, Google, Yahoo, Microsoft, AOL,, the New York Times, and CBS Radio). He left out Disney for some reason, but otherwise it’s a pretty good set of data (see the spreadsheet here). According to his calculations, total online ad revenues across these 17 companies grew 9% last year, online revenues grew 28% (versus 3% for offline ad revenues), and Google’s online ad revenues grew 44% (versus 15% for the combined online ad revenues of Yahoo, Microsoft, and AOL).
But let’s take a deeper dive into these numbers. Google added $2.6 billion in advertising revenues last year. Next in line and far behind was News Corp., which grew its ad revenues by $915 million. To better visualize how much Google is creaming every other media company, I put together the charts above and below (click on them to see a larger version). And here’s a table with each company’s ad-revenue gains (or declines), in descending order:
Now, what about absolute market share? Google does pretty well there too, with 14.9% of the total $58 billion represented by all 17 businesses. That is up from an 11.3% market share in 2006, and makes Google No. 2 behind News Corp’s 16.5% market share. (No.3, actually, behind Time Warner, but Blodget separated Time Warner Cable, Time Inc., and AOL, which combined would have a 15.2% market share).
Looking at the absolute numbers in the pie chart and table below really helps you put these businesses in perspective. For instance, check out Yahoo in the No. 4 spot, with $4.7 billion in ad revenues last year. It is right behind newspaper company Gannett, which is still a cash cow, but saw its advertising dollars decline by $338 million last year. Yahoo, in contrast gained $361 million in ad revenues. That’s still a fraction of Google’s growth, but looking at the absolute numbers let’s you see why Microsoft wants to buy it. A combined Yahoo-Microsoft would be No. 3 on this list.
And here are the underlying numbers:
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AOL On A Bender – KickApps May Be Next Acquisition
AOL, a company that is supposedly on the block themselves, seems to be on somewhat of an acquisition bender lately. In addition to a number of smaller purchases like Yedda and Goowy, and not a day after the announced $850 million acquisition of Bebo, rumors are popping up that AOL is preparing to acquire yet more companies in the coming weeks.
The next may be KickApps, a service for creating social networks, widgets and other services, says Kara Swisher (who’s rarely wrong, except when she said “two words: No sale” regarding our prediction of a Bebo acquisition). She says the company may be bought by AOL for $90 million.
We’ve followed KickApps closely, first covering it at launch in July 2006 and, most recently, when they released v. 3 of the service and started to wade into Ning territory. We also compared them to eight competitors in July 2007.
Does KickApps fit within AOL’s overall widget/socialnetwork/advertising strategy? Sure, maybe. It’s clear they’re embracing social networks, and widgets, already. KickApps gives them some technology and customers to continue that push and offer customized solutions for third parties. That can create lots of inventory to sell ads into as well. On the other hand, I don’t think AOL has fully verbalized their go forward strategy yet. They may not even understand it internally.
KickApps has raised $17 million in venture capital over two rounds of financing - the most recent in August 2007.
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Official: AOL On The Table For A Deal
Time Warner Chief Executive Jeffrey Bewkes has said that Time Warner is open for a deal on AOL.
Bewkes acknowledged weakness in the AOL business and told the Bear Stearns media conference Tuesday that Time Warner was open to combining AOL with another company “whatever configuration makes it the strongest and the most valuable.â€
These comments follow on from statements Bewkes made in February where he said Time Warner would split off AOL’s dying subscription business from the online content/ advertising side. Erick said then that “this is code for a sale or IPO, or both. Time Warner should sell off the access business to a private equity shop and go full-steam ahead with its IPO plans for Platform A.” Today’s revelations would indicate that a sale or merger is definitely on the books.
As the New York Times points out, AOL is still an appealing company, even if its glory days are behind it. The company booked $5.2 billion in revenue in 2007 with AOL properties receiving 112 million visitors a month.
The only question now is who, and for how much.
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AOL Gets It Right With Open AIM 2.0 – Embraces Meebo and eBuddy
AOL is pushing their two year old OpenAim initiative much further this morning with OpenAIM 2.0.
There are three key changes of note. First they are now embracing services that they previously tried to stop - multiheaded clients and websites that allow users to access all of the major instant messaging platforms in one place. These are desktop services like Pidgin (open source), Adium (Mac) and Trillian (Windows). And web based services like Meebo and eBuddy. Today those services have to hack in to MSN, Yahoo and AOL services (Google Gtalk is open). Now AOL is giving them unfettered access, too.
What that means is that AOL goes from being in a position of half ignoring services like Meebo and half vaguely threatening to sue them, to fully embracing and supporting the services.
Second, AOL is also removing the usage restrictions that were put in place two years ago that restricted big services from using them (again, forcing Meebo, eBuddy and others to hack in).
Third, AOL is saying they’ll soon be giving partners who build software on top of AIM the option to run AOL-served advertisements with a revenue share. AOL says more details on advertising will be coming next month, and will be powered by their Userplane group, which AOL acquired in 2006.
There are a number of additional changes to OpenAIM as well, including more robust tools for third party add-ons (see gallery of existing add-ons here) and for mobile applications. And they are documenting their protocol for accessing AIM, called OSCAR.
David Liu, AOL SVP of Social Media, Messaging and Homepages, said in an interview that they want to remove all the friction and hurdles to third parties who want to leverage the AIM service, and welcome them with open arms. “To that end, we’ve come together with third-party chat services such as meebo and eBuddy to enhance the experiences of our users who access the AIM platform from these web-based services. We’re also giving developers the tools and flexibility they desire to build innovative and meaningful applications around instant messaging for web users around the globe.â€
AIM has 27.3 million monthly users (plus another 30 million at ICQ, which is not part of this announcement), according to recent Comscore data. MSN has 235 million and Yahoo has 97.6 million. Gtalk has 4.9 million.
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AOL: Up To 30 New Sites By The End Of 2008
AOL is to launch at least 12 new sites in the next six months, and between 20 and 30 new sites by the end of the year.
Bill Wilson, AOL Executive Vice President of Programming told Bloomberg that AOL wants “to be sure we are appealing to as many consumers as we can.” Ultimately it’s all about numbers; more web properties should equal more traffic and more advertising revenue.
Erick has asked twice when AOL is going to be spun of in what he calls an “advertising IPO.” The continued mass rollout of new sites, combined with the spinoff of AOL’s dying dialup business, would suggest that the company is beefing itself up for that very purpose.
MG Siegler at VentureBeat does ask an important question though: is this a strategy of quantity over quality?
While certainly there is a logic to that strategy, it’s hard to feel excited about a company that hopes to succeed simply by putting more of its product on the web rather than focusing on improving the sites they already have.
AOL sites still sit in a fairly healthy fourth place behind Google, Yahoo and Microsoft; if improving their lot means going wide and niche to draw more people to AOL in an endeavor to sell more ads, it has the potential of working.
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The Personalized Homepage War: Who Matters
It’s time for an update on the personalized homepage wars - Netvibes and Pageflakes tend to get most of the press attention, and they are certainly pushing the envelope and trying to find new ways to make their services useful to users. But those two services have less than 4% of the market for personalized homepages between them (I have emailed both companies to see if their internal stats match what we have below).
About a year ago I posted the visitor stats for the big players in this space - MyYahoo, iGoogle, MyMSN and MyAOL/MyNetscape. All of these services provide a drag and drop interface that allows users to put whatever content they like on their home page, through specialized modules or via RSS feeds. Most of them support third party widgets as well. At that time, Yahoo had significantly more visitors than all of the other services combined - 70% of the 72 million or so visitors to all of the sites combined. At the time, Netvibes and Pageflakes were not large enough to be tracked by Comscore. Now they are.
Based on January 2008 Comscore stats, Yahoo still leads the category, although they’ve dipped about 6% to 47 million monthly visitors. Their market share has dropped to 57%. Google, on the strength of homepage promotion of iGoogle, has tripled to 22 million monthly visitors, putting them in second place with 26% market share. MyMSN and MyAOL/MyNetscape are next, with 10% and 3.3% market share, respectively. Then, at the end, Netvibes and Pageflakes.
Not on the chart is GlobalGrind, a hip-hop centric personalized home page that launched in September 2007. They now have 144,000 monthly unique visitors of their own. Not bad for a site that’s less than six months old.
A total of $20 million or so in venture capital has gone into Pageflakes and Netvibes. But without a major portal or search engine to feed them new users, growth is going to continue to be hard v. the big guys. And since all the big portals already have their own products, they won’t be looking to acquire these startups unless they get a lot of users on their site. It’s going to be a long haul.
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