Good article by the NYT on AOL. eMarketer says that online ad growth is 28% YoY but AOL and Yahoo grew much less. What I think has been discussed less is how that growth might be represented on the publisher side, putting pressure on Yahoo and AOL. Logically, to grow 30% a site must either grow page views or grow rates 30%. Growing page views is harder than it looks. We are not seeing big growth in new unique visitors online, so the growth must be in pages consumed per unique. Much of the page view growth online today, I would postulate, are in social networks. Sites like MySpace and Facebook have super high frequency and are where we are seeing significant growth in page views. Also, the law of big numbers kicks in for Yahoo and AOL with respect to reach. I think we are seeing that Facebook and MySpace have significantly less reach, so it is easier for them to add new uniques to their platform.
These high frequency UGC page views are occupying an increasing share of online page views and they are inexpensive. This puts pressure on the rate cards of large portals like Yahoo and AOL. I think collectively this means it is really, really hard for AOL and Yahoo to ramp page views at the same pace as the global Internet because they are under-represented in UGC content, whereas the broader Internet minus portals is over-represented in UGC.
PaidContent summarizes the NYT report and there is a comment from “Nick Charles” that goes like this: “Advertising.com is a great company, but the idea that it would become more important for AOL than the the AOL brand seems misguided…”. He launches this basically ad hominem attack that implies that only AOL giving up could cause Ad.com to surpass it, but all the evidence presented by the NYT is that Ad.com is growing faster. All it has to do it keep growing like crazy and it has to happen, right?