Advertising Week 2014

AOL Gets Nerdy at Its Second Programmatic Upfront

More Than One-Third of Company's Ad Revenue Now Comes From Programmatic

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AOL went unapologetically nerdy at its second programmatic upfront event last night, getting deep into its product in front of a room packed with marketers in downtown Manhattan as Advertising Week got underway.

The event was starkly different from the one AOL held last year, which essentially functioned as a pep rally for those working in programmatic advertising. This year, AOL Platforms chief technical officer Seth Demsey walked the crowd through the company's programmatic platform, "ONE," going slide by slide through the product's interface. The words "data" and "optimization" were uttered frequently.

Tim Armstrong
Tim Armstrong Credit: Davod Paul Morris/Bloomberg

"This year is about product, it's about execution," said AOL CEO Tim Armstrong when asked afterward about the event. "If you take our average client or agency a year ago, they were maybe testing but ... probably just considering what it was. This year, almost all of our clients and agencies are actually involved and they're actually doing programmatic."

The makeup of AOL's business is still a work in progress. The company still leans on revenue from its "membership" segment, which includes fees it collects from dial-up internet. But under Mr. Armstrong, AOL is placing its bets on three pillars -- video, ad-tech and premium content -- with ad-tech a key area of focus. AOL now collects more than 34% of its ad revenue from the programmatic side of its business, up from just 4% a year ago. Total AOL ad revenue is up 20% in the same time period -- second quarter 2013 compared to second quarter 2014.

The event's product heavy focus also echoed the changing nature of today's media buyer. Though the term "upfront" still connotes lavish parties and deals completed via handshake, AOL is working to shift the meaning of the term to include a new demographic: those making deals behind a computer screen.

The shift was underscored by the presence of NBCUniversal president of advertising Linda Yaccarino. "Why am I at a digital programmatic event of all things? Did I get lost?" she joked. No, she said, telling the crowd she felt comfortable and at home in the room. "Programmatic is here to stay," she added.

Executives from Havas, Zappos and Verizon took the stage as well, all endorsing AOL's approach to ad-tech.

"What you saw in there was exactly what the upfronts should have been," said Matt Seiler, Global CEO of IPG Mediabrands, who also spoke during the event. "We've got this really valuable thing for marketers. Let's tell you the stories, or even have some of the marketers tell you the stories, of how they're finding a way to make it work."

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