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Sep 11, 2008

AOL: Now Our Ad Network Business Is Seizing Up, Too (TWX)

AOL: Now Our Ad Network Business Is Seizing Up, Too (TWX)

This is going to make it harder for Jeff Bewkes to get the price he wants for his wobbling AOL unit: An admission by CFO John Martin that the Web company's ad revenue is sputtering. Bloomberg:

``It had been growing like a weed,'' Chief Financial Officer John Martin said today at a Merrill Lynch & Co. investor conference in Marina del Rey, California. ``We have seen some cancellations. It gives us pause in terms of our confidence to ramp advertising in the back half of the year.''

Martin's spin, spelled out in the WSJ's coverage of the talk (which non-subscribers can get free on their BlackBerrys), is that the slowdown is worst at AOL's third-party ad network business (Platform A), so the effect on margins won't be as bad as it could be. What he apparently didn't spell out is that the ad network has been the one growth engine AOL has been able to count on in recent quarters -- its owned and operated ad business, which is indeed much more profitable, has been in free-fall. So the next quarter could indeed be grim.

Of course, this is also bad news for the rest of the Web business, especially the one-million-and-counting ad networks that have sprung up in the last year. Ad networks were supposed to be particularly resilient to an overall ad slowdown. In theory, advertisers looking for bargain space were supposed to come flooding to the networks, which link them up with publishers' less desirable inventory. And if a top-tier player like AOL can't make it work, look out below.

AdMob: iPhone Internet Use Sees Major Growth Spurt in August

iphone_logo_sep08.jpgAccording to the latest data from mobile advertising company AdMob, traffic from Apple's iPhone on AdMob's advertising network almost doubled in August. Apple's iPhone saw the fastest growth of all smartphones worldwide, closely followed by the Samsung Instinct. It is also noteworthy that the top 5 smartphones in the U.S. generated 54% of all smartphone traffic.

The iPhone is now responsible for 7.8% of all smart phone traffic in the U.S., up from 5.2% last month. It's important to note that this does not necessarily reflect the actual market share of the iPhone, as iPhone users, thanks to the ease of use of the iPhone user interface, are probably spending more time online on their devices than most other smartphone users.


What About Nokia, Palm, Motorola, and Rim?

While Nokia devices were responsible for just over 62% of all smartphone traffic worldwide, none of Nokia's smartphones ranked in the top 20 in the U.S. Palm's Centro, on the other hand, looks like a major boon for the company, as it is only trumped by the Blackberry Pearl when it comes to traffic volume.

motorola_razr.pngMotorola, which does not have a single smartphone ranked in the top 20, still dominates the mobile traffic rankings with its RAZR V3. which was responsible for 3.7% of all mobile Internet use worldwide in August. The iPhone was the 17th most used phone on the mobile web and generated 1% of all worldwide traffic, up from 0.6% in July.

The iPhone is clearly growing quickly in the U.S. and now that Apple seems to have gotten its supply chain under control, chances are that it will continue on this track. However, it is also important to point out that, in the overall market, Apple is still only a small player. Most users, according to AdMob, are still accessing the mobile web on a RAZR.

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