The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

HuffPo ‘Premium’? AOL ‘Desperate’?

Posted on | August 31, 2011 | 14 Comments

Arianna got the gold mine, AOL got the shaft:

AOL is up for sale according to many insiders in the know. Sources in the industry claim that AOL has met privately with the mega-law firm Watchell, Lipton, Rosen & Katz and investment bank Allen & Company about putting the former ISP up for sale to the highest bidder.
While AOL is generating significant revenue of at least $1 Billion for the first 6 months of 2011, they are still losing a great deal of money and the purchase of HuffPost hasn’t helped their woes.
The HuffPost purchase, which was valued at $315M was widely criticized by both the press and pundits alike as a poor purchase decision, or at least one that didn’t make sense at those numbers. Since then, the merger of the company into AOL has been reported to have numerous management problems.
Despite HuffPost continuing to grow since its purchase, the advertising sales revenue has not been able to sell inventory at the level needed to support the organization. Part of the problem reportedly is that the sales team, lead by search advertising veterans has been unable to convince advertisers that they need to pay a premium cost to be on HuffPost and other AOL properties. . . .
AOL seems to now be desperate to find either a buyer, or at least a long term solution to solve their issues. It is clear that their management, seen by many as top heavy salary wise, is not suited to run a content company that needs to focus on cost cutting.

Look: Online advertising is a hard dollar. Advertisers either pay for page-views or pay for click-throughs, and they’ve got software to measure the actual performance of each ad buy. The idea that HuffPo readers are somehow special, so that advertisers should pay a “premium” to have access to those readers . . . well, why?

There is no plausible answer, nor is there any plausible answer for why a value-oriented investor would have paid anything like the $315 million AOL paid for HuffPo. That deal never made sense.

(Hat-tips: Hot Air Headlines via AOSHQ Headlines.)

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Comments

  • https://plus.google.com/114041580398058374552/posts McGehee

    The idea that HuffPo readers are somehow special, so that advertisers should pay a “premium” to have access to those readers . . . well, why?

    Because Arianna’s office remodeling project don’t come cheap.

  • http://nicholas-whatthe.blogspot.com/ nicholas

    If AOL was serious about purchasing an agent for advertising traffic they should have considered a blog entity that was a tad more interested in garnering traffic.  The leftoid  grab-bag that is the Huffington Post would never stoop so low as to get the corner on bikini photos of Carrie Prejean or give play to an unknown singing talent like Champaign Dream (forget the cat fight – it’s traffic, right?)  Bottom line is 7.6 million hits in, what, two and a half years?  I think you know what I’m saying here.

  • Count de Money

    I’m willing to pay for premium content. In fact, I just did. IYKWIMAITYD.

  • http://twitter.com/isleofyouth PhilipJames

    Have you not figured this one out? This whole buying of Huffington Post for a very inflated amount was a way for the moneyed Hollywood and liberal establishment people who put up the seed capital years ago to cash out using the shareholder money in AOL.  This is a typical game that goes on all the time. Who is going to fire Tim Armstrong, AOL President, anyway? Now the liberal elite who backed this Huffington operation which is just a marketing and promo outfit for the Democrats and Progressives using social media. Their work should be considered as political campaigning because they push the Democrat and Progressive agenda 24 hours a day.

  • http://profiles.yahoo.com/u/EU5DQWQTTHTPO4A4ZYSL3AAV2U Adjoran

    AOL is just a form of insanity.  The Time-Life deal/undeal also laid waste to many billions of otherwise perfectly good dollars.  They had a near monopoly on internet access for the American public, but squandered their position by insisting on pursuing their idiotic plan of controlling the content, too (which was fine in the earliest years, but once the World Wide Web hit, it was OVER).

    Add stupidity to the insanity, and you have a formula to get rid of lots of surplus money.

    The stupidity of the price was the price of trying to hide the stupidity of the deal by making it seem of earth-shaking importance just because of the dollar amount. 

    Arianna can’t laugh too much though – I’m certain most of her payoff was in stock and/or stock options.

  • Bacadog

    “..the advertising sales revenue has not been able to sell inventory at the level needed to support the organization.”

    Remember Air America?

  • Anonymous

    Who?

  • http://thecampofthesaints.org Bob Belvedere

    For coming up with Rule 5, Stacy deserves a special place in blogger heaven.

    My little old blog is closing in on 750k of unique hits after 3.5 years and a big chunk of that has come from Rule 5 postings [the Pippa Middleston Upskirt Photo post from 29 April has generated over 50k of unique hits].  And I’ve gotten many regular readers as a result of the Rule 5 postings.

  • DaveO

    IIRC, AOL usually loses a lot of cash every time it makes a deal. I wonder how much in bailouts it got to purchase the PuffHo, and how much more it will get for sinking Arianna’s showcase for virtual Tourette’s?

  • https://plus.google.com/114041580398058374552/posts McGehee

    AOL may be the one and only instance where the government could run it better.

  • http://nicholas-whatthe.blogspot.com/ nicholas

    Love the “Read More” option.  

    Carla Ossa?  Holy smokes.  When she smiles you feel good about yourself, even though you know she’s just looking at a camera.  Where do you come up with these pics, Bob?  Somethings not right!

  • http://thecampofthesaints.org Bob Belvedere

    -The effect Miss Ossa has on you is one of the characteristics I look for when deciding which gals to feature.

    -As for my picture sources: well…I’d be willing to tell for a price because I and The Cardinal have worked damn hard to find them.  I will give you a bit of a hint: Tumblr is a wonderful invention.

  • Actorclavilis

    I just want to thank AOL. No matter how poor of a business decision this was, at least they have a fighting chance of running it into the ground with the rest of AOL. Then we’ll finally be free of that wretched hive of bigotry.

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