AOL Touts Turnaround Success After Record Traffic

With steady growth in visitors and page views to its redesigned properties, the Internet pioneer claims its transformation is paying off.

Time Warner's (NYSE: TWX) AOL today reported that its Web content sites saw record traffic in March, capping off six solid months of consecutive growth -- and fueling renewed claims that the company is succeeding in its closely watched overhaul.

Citing data from online metrics firm comScore (NASDAQ: SCOR) that showed a 28 percent monthly increase in page views for its content sites, AOL proudly proclaimed that its strategy to transform itself into an ad-supported content network is working.

"Our strong growth is a direct result of rebuilding each and every one of our vertical Web sites over the past 12 months," Bill Wilson, AOL's executive vice president of vertical programming, said in a statement.

Compared with last year, March page views across AOL's "Web programming" properties -- its content sites -- rose 35 percent, with unique visitors up 11 percent to 56.5 million. The traffic count excludes visitors to AOL's e-commerce sites, its e-mail and instant messaging services and traffic to the AOL.com site itself.

Because comScore doesn't group sites the way that AOL does -- under the "Web programming" umbrella -- the figure AOL reported is the sum of comScore's traffic reports for individual content segments, adjusted to prevent double counting, an AOL spokeswoman told InternetNews.com. These segments include news, sports, music and more than 100 others.

Because the AOL data was a custom data report, comScore also could not provide an apples-to-apples comparison between unique visitors to all of AOL's content sites and those of the other large portals.

But in the categories of sports and general news, the number of unique visitors to AOL's properties trails MSN and Yahoo (NASDAQ: YHOO). In music and movies, however, AOL ranks ahead of both its rival portals.

comScore reported visitors to AOL's aggregate Web properties in March numbering 111.8 million -- behind Yahoo, Google (NASDAQ: GOOG) and MSN, in descending order.

Three months ago, when Time Warner CEO Jeffrey Bewkes announced that he would separate AOL's media unit from the dial-up business, many industry watchers took it as a sign that he was preening the division for a possible sale.

Since then, Time Warner has been in high-level talks with Yahoo about a possible combination of the two Web companies, as Yahoo searches for a way to provide value to the company's shareholders without selling to Microsoft (NASDAQ: MSFT), which made an unsolicited offer to acquire the company on Feb. 1.

But the comScore figures suggest that even by itself, AOL is doing something right with its transformation strategy -- and that it may be on its way toward shaking off the rap of a grounded high-flyer from the Internet's early days.

In addition to overhauling its existing content verticals, AOL over the past year has launched a number of new content sites, including men's entertainment site Asylum.com and the personal finance site WalletPop.com.

By page views, AOL reports year-over-year growth in most of its content sites, and in several, the increases have been dramatic. Page views on the Body site have increased 760 percent; Home is up 319 percent and Living has risen 241 percent. The page view counts on the Moviefone, Latino and Sports sites have each increased more than 100 percent.

The monetization engine for all these content sites is Platform A, the advertising network built through an acquisition spree that saw AOL snap up online ad companies such as Tacoda, Quigo Third Screen Media.

The recently reorganized Platform A has the largest reach of any online ad network, connecting to 91 percent of U.S. Internet users, according to comScore. At No. 2, Yahoo's network reaches 85 percent of the audience; Google's network reaches 81 percent. Taken alone, the Advertising.com unit of Platform A would still be the largest ad network, connecting with 89 percent of the domestic online population.

AOL also expects Platform A to play a large role in its plans for the recent acquisition of the social network Bebo. AOL justified the $850 million price tag for that purchase with the promise of leveraging the highly engaged audience of the world's third-largest social network to create a compelling, social advertising environment.

Despite their enormous audiences and immense stores of data about people's likes and dislikes, social networks such as MySpace, Facebook and Bebo have so far fallen short of their promise for advertisers. Google, for instance, has said that its exclusive ad-serving deal with MySpace has not yielded the results it hoped.

With the Bebo acquisition still pending, AOL continues to build its advertising and content networks. Last week, the company announced the acquisition of Sphere, a contextual content-matching and syndication company. Today it acquired Fleaflicker, a fantasy sports site that it plans to integrate into its own fantasy offerings.

AOL parent Time Warner reports its first-quarter earnings next Wednesday before the market opens.

TAGS: Facebook,Google,content,Microsoft,AOL

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