Bronte Media

AOL’s quarter is in and it’s not pretty: Display down 15% on its own properties, advertising on Platform A down 12% and search up 12%, most likely because no one at AOL can possibly screw up search more than they have: Google handles all of the ad sales.

Display disintegrating despite usage increases mean that effective CPMs are down across the board.

Remember how Platform A was going to save the division? Not anymore. Not only does it have lousy margins (Google’s TAC for comparison is now nearly 90% on average, which means it pays out 90 cents of every dollar it sells for partners), but now it’s business is also declining.

It wasn’t hard to see that this day would come. Here is what I wrote back in March of this year:

“In fact, Ad.com is probably one of the most successful acquisitions in the Internet industry period. Ironic, given that AOL itself is the most unsuccessful Internet acquisition of all time.

[But] There are two current news items that are at work within Platform A: The first and most important is that the University of Phoenix junked its exclusive agreement with Ad.com. Think that doesn’t matter? It was worth roughly $200m/year. That’s the bad news. The good news is that Ad.com can now work with other online education firms.”

The part about AOL working with online educations firms seems to have been a pipedream. At least so far. This is a note from the 10Q:

“The decline in Advertising revenues on the Third Party Network for the three months ended September 30, 2008 compared to the three months ended September 30, 2007 was primarily due to a decrease of $55 million due to a change in the relationship with a major customer of Platform-A Inc., partly offset by increased revenues of $29 million attributable to recent business acquisitions and other advertising growth of $7 million. Since January 1, 2008, this customer has been under no obligation to continue to do business with Platform-A Inc., and revenues associated with this relationship were $3 million for the three months ended September 30, 2008 compared to $58 million for the three months ended September 30, 2007.”

The major customer is the University of Phoenix. So they used to get $58m a quarter from them, and they managed to pick up $7m in new businesses across the board to offset it.

The Phoenix has risen. Or left. Or some other mixed metaphor.