TechPost: Clearing Up The Ad Confusion At AOL

Zach Goldfarb's weekly update on the local technology scene is back this week with his return from a special assignment reporting on the credit crisis. See what he was up to here.


Ten weeks ago, Lynda Clarizio became head of Platform A, AOL's online advertising network, when it seemed that Microsoft was on the verge of buying Yahoo. The combined entity would have made pittance out of Platform A, which is the core of Time Warner's plan to grow AOL.

In just two-and-a-half months, the world of online advertising changed dramatically. It turned out that the Microsoft-Yahoo deal didn't work out. Instead, Google, which owns 5 percent of AOL, ended up striking a deal with Yahoo to work together - one that faces industry opposition and regulatory hurdles.

"We feel this industry is so intensely competitive and there's so much change in this industry that this is our opportunity," Clarizio told me in an interview this week.


Lynda M. Clarizio. (Courtesy AOL)

But rather than capitalizing on that opportunity in her first three months, Clarizio has been forced to focus on rescuing Platform A from its own clashing parts. Platform A is made up of a handful of different advertising companies, including one that advertises on AOL-branded sites; Advertising.com, a network of 10,000 sites; Tacoda, an ad targeting network that shows ads based on the sites one visits; and Quigo, another ad service.

It turned out that the various advertising companies under the AOL umbrella were confusing customers and competing with one another. The company has yet to see the lift it expected in its advertising results, and growth has been flat.

"We attributed a lot of that really to the integration pains and the fact that we brought a lot of these businesses together very quickly," she said. "We were confusing our customers. We were confusing ourselves. We had created internal competition among our sales forces that contributed to disappointing AOL results."

With 10 weeks behind her, Clarizio claims success at unifying Platform A, an organization of 1,500 people. "Instead of four sales teams, we have one team, the Platform A team, one operations team, one marketing team, one engineering team," she said.

Platform A also has launched new products, imitating Google's famous style of holding an auction to allow advertisers to bid on getting placement when users search for different terms. Platform A works in a similar way for display ads.

Clarizio said the changes have not come without the requisite degree of pain. "Everyone's job has either been expanded to include responsibility across Platform A or has been redefined," she said. "It's also been a cultural change," with the younger staff of Advertising.com merged with the older staff of AOL.

Clarizio said the restructuring has forced her to let some people go. "Some people did not share this vision," she said. "When you have four companies that you've bought, you don't need four heads of marketing, you don't need four heads of product."

In the new Platform A, the technology team remains in Baltimore, where Clarizio, who has spent her entire professional life in Washington and most recently was president of Advertising.com, works Monday and Friday. Tuesday through Thursday, she is in New York.

In addition to competition and integration pains, she'll face another issue in coming months: a softening economy, with a mixed outlook for online advertising. Clarizio said she isn't worried.

"When there have been economic downturns in the past, online advertising has continued because it's measurable," Clarizio said.

And by measureable, she means that with radio, TV and newspapers, it's harder to say who exactly is seeing an ad and so big companies might pull back on their big advertising buys in favor of online ads where it is easier to count clicks.

That's the theory, at least.

By Zachary Goldfarb  |  June 20, 2008; 12:00 PM ET  | Category:  TechPost
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