Will marketers accept HuffPo deal?
Facebook acquisition makes big splash
AOL's February acquisition of digital news source The Huffington Post raised eyebrows across media and advertising industries. Experts wonder whether the website would put off advertisers who avoid politically opinionated sites. Others pondered why the forward-leaning blog would pair up with AOL, which reached its zenith of popularity more than a decade ago in the dial-up age.
AOL bought The Huffington Post in a bid to draw more readers and advertisers. However, some Madison Avenue executives are
expressing concerns about the liberal-leaning nature of the site and its potential to taint the broader AOL brand. Indeed, some ad
executives think that the link-up could attract a new set of advertisers. Meanwhile, others don't see anything extreme in The Huffington Post. And when it comes down to it, most advertisers mainly want to put their money where it will generate clicks.
What we know now is that most advertising-based websites struggle economically. The vast inventory of sites and the persistently low rates for online advertising have left sites in endless pursuit of bigger audiences — hoping to add enough penny clicks together to equal serious ad dollars. ComScore measured AOL News with the seventh-largest US news audience in December, with over 35 million unique visitors. Together with 10th-place The Huffington Post, and all subsidiary AOL sites, the merged company claims an audience of 117 million.
It's true that AOL and HuffPo's networks of free labor make them cheaper to produce than, say, NYTimes.com. However, AOL's troubles in this space show why this still may be a losing strategy. As more and more pages are added to the Web, the space available for commodity Web advertising is growing much faster than the demand for same.
What makes the HuffPo acquisition so noteworthy is that it comes immediately after yet another quarter of absolutely disastrous results at AOL: display ad sales were down by 29%, search and other contextual ads declined by 34%. Meanwhile, the online ad market overall is booming, showing a 17% gain in Q3 2010. The AOL brand is lacking credibility, not only with consumers, but with advertisers. I spent most of last week chairing a social media conference in Florida, and when the subject of AOL came up among attendees, it mostly elicited sad headshakes.
The Huffington Post's growth over the past seven-plus years since its launch is impressive. It now aggregates about 300 stories a day from other publications and publishes its own blogs and columns. It also ranked ahead of online rivals the Drudge Report and The Daily Beast last year in terms of Web visitors. However, new owner AOL is most interested in the fact that the site posted a full-year profit last year — an impressive feat for an online-only media source. If the site continues to attract advertisers at this pace, the deal will be a return to prominence for AOL.