Content is king at AOL
BusinessInsider.com has unearthed a presentation that the meandering dot-com giant is reportedly using to train its editorial ranks. AOL intends to dramatically ramp up its content this quarter, but it will be easier said than done.
Starting with a baseline of 33,661 monthly articles generating a median of 1,512 in page views, CEO Tim Armstrong is aiming for a run-rate of 55,000 monthly content pieces by the end of the quarter.
That goal is obviously doable. Content mills Demand Media
It's actually the rest of the goals that seem unreasonable. AOL wants to bump up its media page views per article to 7,000. It also wants to go from incorporating video in 4% of its stories to more than two-thirds of its owned pages. Oh, and it also wants to lower the average cost per piece of content by 15%.
Some of these goals may seem mutually exclusive, but AOL's margins will fly through the roof if it succeeds.
Unfortunately, the odds are stacked against it.
AOL wants to use magnetic headlines, social promotion, and some search engine optimization to get the ball rolling, but "Lady Gaga goes pantsless in Paris" -- an actual example in its 58-slide presentation -- can only take you so far.
It's easy to see why AOL is pushing for content. Demand Media had a blazing hot IPO last week, tagged with an enterprise value in the ballpark of AOL. However, AOL may be overplaying its hand here.
Subscription revenue has fallen by 26% over the past year, as broadband-savvy consumers continue to cancel the iconic access provider's service. This would be fine if folks are flocking to AOL's free ad-supported content, but that's not faring any better. Advertising revenue for AOL in 2010 also clocked in 26% lower than a year earlier. Compare that to Yahoo!, where display advertising is actually growing despite its struggles elsewhere.
Drumming up more content for a shrinking user base isn't going to turn things around. It is the right approach, but AOL's lofty goals just aren't realistic.
It may be too late for AOL to hand off its fading access business to EarthLink
There's nothing wrong with imitating what works. Groupon was a hit, so AOL has repositioned its Wow.com domain as a local deal site. Cool. Hyperlocal advertising has potential, so it recruits a fleet of freelancers willing to work for $25 an article. Fine. As we speak, executives may be practicing "I am Demand Media" before a mirror. Great!
The problem with aiming too high, though, is the morale-crushing letdown when April rolls around and the company falls short on one or more of its goals.
Good luck, AOL. It's not easy to go fishing in a pond that hasn't been restocked with fresh eyeballs in some time.
Start flexing that bended knee, Yahoo!.
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Longtime Fool contributor Rick Munarriz wonders if AOL will ever party like it's 1999. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it's got mail.