Internet company AOL saw profits dive 86% in the first quarter of 2011, but reported strong revenue figures from advertising.
Total income dropped to $4.7 million for the quarter, with revenue falling 17% to almost $552 million. Last year in the same period, it posted profits of $78 million.
Subscription revenue also fell 24% to $215 million as web users abandon their dial-up connections and sign on with rival broadband providers. However, display ad revenues increased 4% to $130.5 million, marking AOL’s first upward activity in advertising figures since 2007.
Huffington Post Acquisition Cost $315M
AOL pointed to increased investment to explain the profit losses, with acquisition-related expenses also on the rise. In February 2011, it bought The Huffington Post for $315 million, also acquiring online video distribution network GoViral for $96.7 million in January 2011.
In addition, the company also spent some $27.8 million on restructuring expenses as it struggles to re-invent its dial-up modem business.
But company CEO Tim Armstrong chose to concentrate on the positives, saying the advertising revenue was “an important milestone in the turnaround of AOL as global display revenue grew for the first time since Q4 2007”.
“I am proud of the work completed thus far and we remain focused on accelerating our momentum through continued execution of our strategy to become the premier digital content company,” he said.
The acquisition of The Huffington Post and GoViral, as well as technology media network TechCrunch last year, helped boost display ad figures, and experts are predicting it may be the beginning of the end of AOL’s revenue woes.
Key Statistics – Global Digital Display Advertising Market
- The global online advertising market is expected to top $96 billion in 2014, up from 2009’s figure of $58 billion, according to software solutions provider Dion Global Solutions.
Key Players – Online Display Advertising Market
- Microsoft, AOL, Google, Turner Digital, Fox Interactive Media, Glam Media, CBS Interactive, Viacom Digital, Facebook, Yahoo