AOL’s latest ad network strategy just may be paying off, though the company is seeing losses in other areas. In the first nine months of this year the Internet portal reported a loss of $9.7 million, 98.8 percent less than the same period in 2010, though advertising revenue went up for the second consecutive quarter. Their revenue is slightly higher than market expectations of $524 million.
AOL reported a net loss of 9 cents per share, compared to the $7.96 per share it lost in the same nine months of the previous fiscal year, when their losses came to $848.7 million.
The advertising business took off by eight percent over the previous year, while business collapsed with Internet access charges by 22 percent. While the national and international advertising business grew, the search engine advertising is down by 15 percent.
AOL President and CEO Tim Armstrong said that, despite losses, the advertising revenue of the company worldwide grew 8 percent between July and September for the second consecutive quarter, to “help substantially reduce the gap between future revenues and profits.”
The results were higher than forecast by analysts, as AOL shares rose 9.89% today in New York Stock Exchange.
Social Networks, Marketing Preferred for Network Ads
More than ever, marketers believe that brands should engage with consumers in social networks and advertising is an increasingly successful tool to do so. As a result, revenues from advertising on social networks worldwide will exceed $8 billion in 2012 and to reach 10 billion by 2013.
As more companies build their marketing presence on social networks, they are also increasing their focus on spending advertising dollars. Facebook is expected to have the vast majority of revenue for advertising in social networks. By 2012, Facebook will benefit from $5.78 billion in advertising revenue, obtaining 72 percent of all advertising revenue from social networks.
According to a recent report from comScore, Facebook’s ad revenue will reach $2 billion in the US from 162 million unique US visitors. Google on the other hand is expected to earn $12.8 billion in US ad revenues from 184.6 million unique US users.
Yahoo Sees a Similar Future
Yahoo also aims to strengthen its business through acquisition of companies that specializes in targeted advertising. Earlier this week Yahoo signed an agreement to acquire Interclick, a U.S. provider of services for the online optimization. The $270 million acquisition aims to strengthen the potential from advertising revenue through increased user segmentation. For two years, Yahoo has failed to significantly increase its advertising revenue, even as the market resumed strong growth, especially on the display side.