Not long ago, AOL, now aol, turned 25 years old. The company is now older than a large number of people working in the performance-based industry. There are mini-moguls of our space who wouldn’t know what a modem sounded like, were it not for video games, and who never whittled away hours in the closed web which was AOL. This generation simply knows of aol or perhaps they don’t even know of aol at all. From the once enviable position of subscription revenue, the company now makes it’s revenue solely from advertising. Their strategy, and hopefully re-ascendancy, comes at the hands of a former Googler, Tim Armstrong, and is both well-known and well-covered. They might have been the first social network – they had the dominant mail and chat platforms – but today it involves mainly content. As a recent article in the Washington Post says, AOL has a goal of "creating millions of pages of news, reviews, statistics, how-to guides — any content around which it can sell ads." It’s a model that works the reverse of typical content production where you produce what the editorial team wants and sell ads against it later. They produce content based off on intent, focusing primarily on the content for which a ready stream of advertisers exists.
Perhaps most interesting of all is that aol is not alone in their strategy. As we have written before, theirs is not unique; they may just be the largest company to commit down this path. Many private companies crank out these Made For AdSense 2.0 sites, from single person shops to the multi-hundred employee Demand Media. No longer though is aol alone as the public company going down the content creation and curation route. Yahoo has joined the fray with its recent purchase of Associated Content. An Internet story that seems almost too good to be true, Associated Content was founded by and funded by aol’s Tim Armstrong. The $100mm transaction means that the content business has already treated Tim well. What it gives Yahoo, is seems, is two things. The first is an additional 10mm or so unique monthly visitors to add to its 140mm in US, but arguably what Yahoo wanted more was the content creation factory that it could apply to its site. If they really wanted to stack the deck, they could have Bing make sure to rank Associated Content high, or similarly, they will start to produce new content for Yahoo and make sure that it gets rated highly.
In addition to the purchase of Associated Content, Yahoo has announced a spate of deals, everything from the acquisition of an Indonesian version of yelp / foursquare to a deal with social gaming monster Zynga to make its games available across the Yahoo network. A recent article in Giga Om described Yahoo’s new strategy as outsourcing. Similar to Google, Yahoo ran several other ancillary businesses, such as shopping and dating. They haven’t exited those businesses completely, but they have handed off control effectively, to PriceGrabber for shopping and Match.com for the personals (not to mention search). Compared to aol, Yahoo certainly seems to be making a push into relevancy. I don’t envy relatively new CEO Carol Bartz. It’s hard to tell which CEO – Armstrong or Bartz – inherited the bigger sinking ship. Both have said, to some degree, that they want to be the next Apple. Each has been either down and languished at the best, very much like Apple did for the better part of a decade. And, ‘lo, just yesterday, Apple hit a milestone that hardly any would have predicted, becoming the largest technology company in the world, surpassing Microsoft in terms of valuation.
Yahoo and aol’s apparent content quest is at a stark contrast with how the new school seems to work. When MySpace was the Facebook of yesterday, the talk centered so much around user generated content and the power of user generated content. That quickly shifted to the damaging power of user generated content with example after example of brand unsafe ad spots. Yet, if we think about the biggest and hottest companies today – Google, Facebook, Twitter, along with Foursquare, LinkedIn, Yelp, etc. – all of them are not that far off from user-generated. Google doesn’t have its own content. Facebook and Twitter certainly don’t either. They enable and give ego and/or monetary reasons to produce content, whether it’s a web page, a more robust social profile, broadcasts, and more through their systems. And the vast majority also have something else in common, a large piece of their revenue coming from self-service interfaces.
As easy as it is to want to count them out, both Yahoo and aol have something going for them – the ears of brand advertisers. We can see why they desire to focus on decent enough content that they control. It means they can sell more ads without fear of how it looks. The challenge, as guessed, is making that pay off. Articles for $20 a pop are only so good. Then it comes to monetization. Perusing Silicon Alley Insider, we see that hot articles there generate around 10k page views, with an insanely viral one generating 100k. At a healthy $5rpm, it would mean $50 for the 10k page views and $500 for the most popular pieces. Those would be great numbers but a tall order for the long tail approach. The old school companies don’t have to worry about privacy the way Facebook does or a degraded user experience such as Twitter‘s recent ad battle with users of its API. Those however might be welcome challenges for Yahoo and aol. They are struggling for relevance in a world where having eyeballs to sell ads against can make money, but being a media company doesn’t make you good at anything.
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