Update: See below for details.
After months of negotiations with advertisers and agencies, AOL is starting to roll out "Project Devil," a larger ad format it hopes will deliver a higher ad rate while decreasing the number of ads on a typical web page.
But "Devil" ads will play a big part in the integration of the Huffington Post, once the $315 million deal closes, according to people familiar with their plans. Indeed, deploying the ad will be an early test of the relationship, because it will require a redesign of Huffington Post's famously cluttered pages.
The new ad format is part of CEO Tim Armstrong's plan to "to redesign the internet," which means decreasing the sheer number of ads blasted at readers and selling them for higher rates. The company has over the past year shaved away many of the ad banners and boxes that are on many of its pages, resulting in a 25% drop in ad revenue from 2009 to $2.41 billion last year. Devil is a way to supplant those cluttered ads with premium, higher-priced placements, drawing in more brand-focused companies.
AOL has put in a considerable amount of resources and time into developing the format, which strips down the right side, taking roughly a third of the page. AOL had initially hoped that other big publishers would follow suit and adopt it as one of several standard online ad formats.
While the company said several publishers have expressed interest, none have implemented it, partly because they would have to redesign their pages to accommodate the larger size, not an easy undertaking. AOL needs other publishers to adopt the unit for agencies and marketers to start developing content for it.
"This is the future of what display is heading toward," said Jeff Levick, AOL's president-global advertising and strategy. "People buy Vogue because they want to read the ads as much as the content. That's exactly what we want to do."
The "Devil" unit includes several modules for content, images, video, Twitter feeds, Facebook integration and the like, and is designed to keep readers on the page. AOL acquired Pictela earlier in the year, which has technology that allows a company to load an entire catalog or playlist of videos within an ad.
What AOL is dangling for publishers is at least the concept of replacing the typical two ads on a page for one, bigger, more magazine-like ad for ad rates in the range of $35 per thousand viewers, three to four times that of a typical banner ad. With that in mind, AOL has submitted the format to industry trade group Interactive Advertising Bureau in hopes it will endorse it as a new standard. The IAB plans to announce its new sanctioned formats this weekend.
"We're hoping the rest of the industry can adopt the new standards -- we don't want this to be proprietary," Mr. Levick said.
Toyota has been running Devil ads for its Highlander SUV on AOL for the past month, and though the results so far are inconclusive given its short life, executives say Devil has been far more useful to readers than typical online ad placements.
"Because we know consumers' time is valuable, we're trying to give them something of value, something that's relevant," said Kim Kyaw, senior media strategist at Toyota, who pointed out that readers have played with the ad at higher rates than typical ads that also feature "rich media" components, such as quizzes, games and video.
For Toyota executives it solved the usual ad clutter found on so many websites. "It fit nicely within the flow of the page and the layout," Ms. Kyaw said of how Devil played on AOL site Parent Dish, where it was the only advertiser. "It's one consistent unit so we're not competing with other messages on the site."
AOL execs are selling the capabilities of Pictela, which ads functionality to any of the three interactive "modules." Pictela's clients have generally fallen into the fashion and retail space. "Consumer experiences around advertising are changing -- they don't want to click away," said CEO Greg Rogers.
Beauty company Revlon wanted to take advantage of Pictela's features that allow for sharing through Twitter or Facebook, but saw an emergent benefit to that action.
"All that sharing through Facebook was very consistent with our brand message," said Julia Goldin, Revlon's global chief marketing officer. "We're reinforcing our products through a real connection with consumers, one that's emotional rather than just showing them something. It has more meaning."
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UPDATE: According to a spokesperson for the Huffington Post, Project Devil is being considered for the site, but nothing has been settled. The merger between AOL and the Huffington Post has yet to be completed and is expected to close soon.