AOL's Programmatic Bet Is Paying Off

Revenue From AOL Platforms Grew 44% Over Past Year

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Without AOL's ad-tech business, the company would essentially be a random collection of media properties subsidized by fading dial-up revenue. With it, AOL appears to be positioned for long-term success buoyed by booming programmatic ad spending.

Tim Armstrong
Tim Armstrong Credit: Bloomberg

AOL ad-tech and video (platforms) revenue grew 44% over the past year, driving an 18% increase in the company's overall ad revenue, according to its third-quarter earnings report released today.

"We're encouraged by progress of the platforms segment, suggesting AOL is squarely participating in market shift toward programmatic execution and video," said Wells Fargo Securities senior analyst Peter Stabler in a research note following the release.

Programmatic revenue now makes up 37% of AOL's non-search advertising revenue, up from 12% a year ago. The programmatic growth helped AOL grow its revenue for the seventh straight quarter. Its display revenue growth was essentially flat.

In the third quarter of 2014, AOL brought in $626.8 million, beating estimates of $623 million. The company's earnings per share of $0.52 met consensus expectations.

"We will be really continuing to put the gas pedal down on the programmatic side," said AOL CEO Tim Armstrong on the company's earnings call this morning, giving an investors a look at what is to come in 2015.

Mr. Armstrong also addressed Publicis Groupe's acquisition of Sapient, telling investors he emailed with Publicis boss Maurice Levy about it and is "very pro on the acquisition." Sapient's content-creation abilities and its client overlap with AOL, Mr. Armstrong said, is likely to lead to more partnerships.

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