AOL: Returning to the fray

Mydaily.co.uk: AOL's online women's magazine
Mydaily.co.uk: AOL's online women's magazine

Following some high-profile mishaps, AOL is back with a whole new strategy. By Sarah Shearman

After a number of years in the doldrums, AOL is attempting yet another comeback. Having failed as a broadband provider and then as a social network owner, it has a new goal: to become the world's biggest content provider. With the brand having recorded a $1bn (£628m) loss in the second quarter of this year, it is easy to pinpoint the motivation behind the change in strategy.

Last week, Marketing revealed that AOL is starting to roll out this fresh position in the UK: the first advertising for its recently launched online women's magazine, mydaily.co.uk, goes live this week.

The site was created for 'super-stylish, forward-thinking women' between the ages of 25 and 44, one of three audience demographics that AOL is strategically targeting. The others are 25- to 44-year-old males and the over-55s. 'We are focusing on under-served, highly lucrative audiences, such as working mums who have more interests than simply recipes and fashion,' says Sarah Gavin, vice-president of communications at AOL.

The brand has also relaunched its music and news sites, and the attempt to claw its way back into the territory of rival internet giants includes an aggressive acquisition spree. Earlier this month AOL snapped up video website 5min.com, social app store thinglabs.com and technology blog TechCrunch, all on the same day. The TechCrunch acquisition is reported to be worth about $40m (£25m) and is part of AOL's plans to spark a resurgence by creating a portfolio of websites with growing audiences.

This all feeds into AOL's interestingly named 'Project Devil', which aims to create an impact by running digital advertising across its sites. It's worth noting that it is looking to do this with fewer staff: the company is completing the process started in November last year of making 2500 people redundant. The choices may be tough, but are necessary if AOL is to deliver on its aim of rebuilding the brand.

It faces significant challenges, not least the plethora of quality content already available on the internet, much of which is free, as Toby Horry, managing director at Dare, points out.

'With too much choice and plenty of tools through which people can filter it, it is becoming more apparent that brands need to do things that warrant peoples' time and attention,' he says. 'There is a danger that AOL will run out of money before it gets to a place where it can have a critical mass of valuable content that sets it apart.'

Mikhail Basman, head of digital products and search at Media Contacts, is more optimistic. He says that as paywalls go up, AOL's sites could attract the attention of those hunting for quality content but who are unwilling to pay for it. 'There is no doubt people will be interested in AOL's sites, but the real challenge will be in retaining this interest. If it does, advertisers will line up,' he says.

Acquiring companies is, put politely, not something at which AOL has a great track record. After its merger with, and subsequent demerger from, Time Warner came the significant loss it suffered on Bebo, which it bought for $850m in 2008 and sold for less than $10m (£6.2m) this June.

Of the latter, Jim Clark, senior technology analyst at Mintel, says AOL's failure was down to a combination of Bebo being 'oversold' to AOL, along with AOL not investing enough in it.

However, new management with increased vigour and more than a modicum of respect in digital circles may help AOL's chances. The Bebo debacle was a legacy of former chief executive Randy Falco. Its current chief executive, Tim Armstrong, whose career includes a tenure at Google, has set out a clear, long-term strategy and is treating the company as if it were a start-up. This should stand it in good stead by allowing for innovative thinking and giving the company an opportunity to start with a clean slate.

AOL's history suggests that yet another new strategy will emerge in a few years' time. Moreover, when many companies are struggling to make money from editorial, content may not seem the most logical route to pursue. Nonetheless, with the promise of true reform and visionary leadership, AOL has a chance, even if it never returns to the heights of its 90s heyday.

AOL timeline
1983: Quantum Computer Services (later named AOL) founded
1991: Quantum renamed as America Online
1992: AOL went public on NASDAQ
1995: AOL reached 1m members and extended its service internationally
2000: Survived the bursting of the dot-com bubble and merged with Time
Warner to become AOL Time Warner.
Mar 2008: AOL acquired social networking site Bebo
Dec 2009: AOL demerged from Time Warner
Jun 2010: AOL sold Bebo to Criterion Capital Partners
Sept 2010: AOL acquired TechCrunch and launched myDaily.co.uk
Oct 2010: AOL and Yahoo could merge, according to reports

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