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Mar 29, 2008

NEWS: Long Tail Economics

Google news search with phrase 'Long Tail' produced the list below. Note the following conclusions:

  1. Search optimization or flypaper effect?
  3. No adsense

Will the burden of the Long Tail kill Internet commerce?
ZDNet - Mar 22, 2008
Long Tail businesses are based on aggregating huge numbers of micro-markets. GOOG, Facebook, YouTube, and many other online businesses are Long Tail ...
Have we misinterpreted the business value of the long tail?
ZDNet - Mar 20, 2008
I’ve been thinking about the economics of the long tail and its impact on the business of Silicon Valley’s largest Internet companies and discovering some ...

Brandweek Magazine
The Long Tail Batters Borders
Brandweek Magazine, NY - Mar 22, 2008
By Elena Malykhina The Long Tail may be responsible for both Borders' and Barnes & Noble's latest painful chapters. As the book chains report drops in ...BKS

Straits Times (subscription)
How macaques and humans can live together
Straits Times (subscription), Singapore - Mar 25, 2008
I came to learn about a small population of long-tailed macaques that live in the few forest patches that remain on this once lushly forested island. ...
The Longtail of IT Governance
ZDNet - Mar 14, 2008
Archer Exchange is an intriguing idea one that allows the company to address the long-tail of applications within the IT governance space. ...

Dogs with docked tails can grow up mean: study
Canada.com, Canada - Mar 24, 2008
"When the long tail was wagging, then other dogs would approach (the robo-dog) in a confident friendly way," Leaver said in an interview. "But when the tail ...
Mercury has super long, glowing tail
ABC Science Online, Australia - Mar 2, 2008
New measurements of Mercury's yellow-orange tail, which streams in the solar wind like thelong tail of a kite, put it at more than 100 times the radius of ...
Mercury has long, glowing tail
Times of India, India - Feb 29, 2008
According to him, the actual two degree sodium tail is as long as four full moons. Baumgardner said that Mercury was blocked out in the image as its ...
Open country
Borders Today, UK - Mar 27, 2008
In the relatively dim light of the wood I nonchalantly replied that they must be as no other little bird has such a long tail – in fact, more than half the ...

CNET News.com
Political blogs are definitely long tail, survey says
CNET News.com, CA - Mar 10, 2008
A new survey shows that few Americans really care what bloggers have to say about politics, despite the plethora of opinionated blogs out there this ...

NEWS: Turn the BBC into an empire on which the sun never sets

BBC Chief Has Radical Designs on Internet - By AARON O. PATRICK LONDON

Civil servant Mark Thompson wants to turn the British Broadcasting Corp. into an empire on which the sun never sets.
I track independent and newspaper blogs. 

On the weekend, newspaper blogs die. Independents have reduced volume.

The sun does set, even on the Internet.

Ed: Testing some new blog features.

Mar 28, 2008

NEWS: Google's Decelerating Clicks

Google's Decelerating Clicks

Analysts Are Divided 
About the Significance 
Of Advertising Data
By SCOTT MORRISON March 28, 2008

Google Inc.'s short-term outlook has grown increasingly murky in the wake of new data showing weakness in the number of consumers clicking on the Internet giant's search ads, the source of nearly all of the company's revenue.

The February data from research group comScore Inc. marks the second consecutive month that Google's paid-click data disappointed analysts and investors, who responded by driving the company's shares down 3.1% Thursday.

  The News: A report from research firm comScore suggests growth in the number of clicks on Google's search ads continues to slow.
  Background: Google says the deceleration is due to steps it has taken to improve the quality of clicks.
  Outlook: Analysts are split about the impact on Google's first-quarter results.

But analysts were divided about the reasons for, and the impact of, the disappointing data. Some suggested economic weakness could cause Google to fall short of Wall Street's first-quarter estimates, while others argued that efforts by the company to trim the number of clicks -- which should enable it to increase the amount it charges per click -- will boost the company's long-term prospects.

NEWS: New Study Shows that Heavy Clickers Distort 

NEWS: Cookie Deletion Inflates User Metrics
ANALYSIS: Internet Consolidation or Fragmentation?
NEWS: Google February Paid Clicks Lousy (Again)

Ed: Google has hit the wall on click supply - regardless of CPC demand. They are hoping that the average CPC will rise enough to compensate. Don't bet on it. Millions of SEM folks continue to pay a penny hoping for any click. ;-)

NEWS: NAA Reveals Biggest Ad Revenue Plunge in More Than 50 Years

NAA Reveals Biggest Ad Revenue Plunge in More Than 50 Years 
Total print advertising revenue in 2007 plunged 9.4% to $42 billion compared to 2006 -- the most severe percent decline since the association started measuring advertising expenditures in 1950. Even Internet income is slowing. - March 28, 2008

Newspaper Ad Spending Fell by 10% in 4th Quarter


Advertising expenditures at newspapers and their online editions fell 10% in the fourth quarter despite a sharp increase in online ad buys, suggesting that the industry remains troubled by a shift away from print readership and a sputtering U.S. economy.

Ad spending at newspapers and their Web sites totaled $12.6 billion in the December quarter, ...

Mainstream Media Finally Cops To Dependence on Blogs*

As mainstream media disintegrates, one of the final plums of pride clutched by those who still work in it is that bloggers are just parasitic leeches who depend on them for every last info nugget and pageview. *(In original post, there was a snarky, and, in retrospect, unfair aside here about a dialogue in the comments of this post. Our apologies to Dan Miller).

In anonymous surveys, if not in interviews or religious sermons, mainstream media journalists are finally copping to their dependence on blogs. The 2008 PRWeek/PR Newswire Media Survey queried 1,231 journalists, and here's what they said:

  • Nearly 73% of respondents sometimes or always use blogs in their research.

SJ Mercury News to be leaders on Internet, "pick up the pace", and integrate staff

Recently appointed Executive Editor of Mercury News Dave Butler sent the following memo to the newsroom describing his vision for the newspaper. He states that their mission remains largely focused on "technology and diversity". Some important points that he made:

- The newspaper should not only be the leader for Bay area sister publications, but also the leader of "news experimentation on the Web - trying new ways to satisfy the varying needs of our readers."

- From timeliness of local stories to decision-making, there is a need to pick up the pace. If one story is finished in a day, start working on second or third.

- While making the paper the "most-compelling, interesting, lively and helpful that anyone can get", embrace the "Web-first" distribution philosophy and approach. In other words, create a unified staff instead of separating them into separate print and online groups. 

- Readers want " lots of useful information quickly and they want to pick what is most important." It doesn't matter if they read the articles online, just as long as they read it from Mercury News. Consequently, a wide assortment is necessary, "in terms of subject matter, tone, emotional appeal, length and appearance."

- Evolve with the industry, meaning more useful service material, as many higher quality stories with "energy and flair" that can be produced, talking to people more for stories, better organization and planning, telling more stories in Q & A's, more graphics.

Source: Bazeley.net through Poynter Romenesko

Young viewers finding news from their friends and social networks online

Picture 1.pngAccording to interviews and surveys, not only are young viewers turning to sources such as YouTubeFacebook, and late-night comedy shows like "The Daily Show" for their news instead of from traditional media, they also rely on their friends and social networks to receive their news. Essentially, a social filter is replacing the professional filter, such as reading a paper or surfing through news sites.

Newspaper CEOs Totally Stoked about Yahoo

rollercoasteryahoo.jpgIf an Editor & Publisher "Special Report" on Yahoo's newspaper consortium project is any indication, everything's going swimmingly with the project, despite worries of how an impending Microsoft takeover could affect the situation. Consortium CEOs got together at a two-day meeting at Yahoo HQ in Sunnyvale in which Yahoo EVP Hilary Schneider and President Sue Decker were in attendance. Apparently the leaders of this motley media crew were throwing around terms like "blown away" and "psyched" afterwards.

Does Yahoo have a rollercoaster in their office courtyard we haven't heard about?

Anyway, though the story acts as a re-cap and somewhat of a cheer-fest for the Yahoo project, there are some tidbits of interest. For one, MediaNews Group CEO Dean Singleton told E&P Yahoo has 572 staffers working on paper consortium efforts, and he's been told that will increase to 700 in the coming months. I've seen Yahoo job ads for HotJobs sales gigs, so don't doubt they're hiring, but these numbers do seem really high.

The story notes, "In the next few months, newspapers will begin beta testing of a platform that moves beyond the troubled recruitment advertising arena -- and from traditional mass aggregation of eyeballs into targeting by demographics, geography, and consumer behavior. None of the CEOs will describe in any detail what Yahoo has cooking, but they are uniformly impressed."

This testing is already happening. ClickZ reported this about a month ago, noting Yahoo has already begun testing behavioral and geo-targeting across the growing network of newspaper sites. At the time, Lem Lloyd, VP of Yahoo's Newspaper Consortium told me about 20 paper sites were testing sales of Yahoo inventory to their local advertisers, while Yahoo was testing sales of those paper sites to national advertisers. That test group was expected to expand to 50 in a month's time.

More recently, McClatchy's Chris Hendricks told me McClatchy has had two sites live in the Yahoo pilot test for display advertising for about three months.

E&P also made note of quadrantOne, the new newspaper network led by Gannett, Hearst, Tribune, and The New York Times Company. QuadOne recently added new sites from publishers already partnering with Yahoo, raising questions about the paper companies' attitude towards the Yahoo deal. The story notes, "QuadrantOne has a dedicated sales staff armed with committed inventory from each paper, though Williams could not say how many salespeople will be involved."

For the record, ClickZ reported when the network launched in mid-February that, 17 people are on board to sell CPM-based standard and rich media ads to national advertisers. Some handling ad sales out of New York, LA and Chicago are on the national sales teams at owner firms, including quadOne Interim CEO Dana Hayes and SVP Sales Donna Stokley, both top Tribune Interactive sales execs. They also planned to hire additional sales staff at the time.

Newspapers are f’ed

Newspaper ad revenues have taken their worst drop in almost 60 years - worse even than 2001. E&P reports:

Ed: Productivity. Economic definition is income per capita. To compare online and print media, calculate revenues per reporter after deducting print and circulation costs. If newspapers can't compete on productivity, then paper will disappear - regardless of the preferences of die-hard subscribers. 

Online publishers need to earn higher eCPM. Print publishers continue to squeeze costs. 

Mar 27, 2008

Reality Television Comes to Journalism - Thy Name is Blogger

I've found, read, clipped, and posted articles from hundreds of journals. Here are my observations on how blogging has changed journalism.

Timeliness Versus Narrative

I've read and seen the conflict between casual bloggers and professional journalists. Silicon Alley and TechCrunch no longer wait for press releases and editorial review. They post news bits as soon as possible. Their productivity is 5 to 10 posts per person per day.

Days later, my Google alert service reports the same news from legacy publishing sources. They are too late. Google alert is too late.

About Voices at the Wall Street Journal

Because the site is wholly owned by Dow Jones, publisher of The Wall Street Journal, we aim to adhere to the journalistic standards of the best of the mainstream media. But, because it is run autonomously as a small online startup, we aim to exhibit the fresh thinking and nimbleness of the best of the new media. We want to be first, and sassy, but also well sourced and accurate. We will offer lots of opinion and analysis, but plenty of fact as well.

One week later, consultants, experts, and other writers digest the news to produce in-depth commentary. Good narrative starts the cycle among bloggers, legacy journalists, and more commentary.

I've adopted a writing process that is common among bloggers. Snips of news, stats, and quotes are posted immediately. Once a week, I digest the collected posts and write an in-depth how-to or analysis in narrative form - a process very similar to magazine and newspaper writing. Magazines may call them news briefs, columns, and features - but, the components are similar.

Thus, a blog has both the immediacy and frequency of content. In-depth narrative adds expertise that is often deeper than can be produced by a general journalist.

Is this Reality Journalism?

Beyond timeliness, bloggers frequently use first person notes. 

Similar to reality television where the contestants verbalize their emotions and thoughts through the battle, blog writing has become an open reporter's notebook - live with real-time interviews, thoughts, scribbles in the margins, and authenticated facts. I don't need the reporter's notebook and a filing cabinet for press releases. My blog is the notebook.

The final performances are the occasional posts that synthesize. Just like reality shows, real audiences shout and applaud - often in real-time. Of course, visits and page views don't have the same emotional high for the writer.

Lessons for Bloggers and Journalists

Is this an element of blogging that is overlooked by legacy journalists? Are movie fans only interested in the movies or are they as fascinated by the public lifes of stars? Rather than attacking blogs as amateur journalism, perhaps the writing personalities and process stirs as much interest as the results. Is the controversial Michael Arrington a star? Have we circled back to the beginning of newspapers when publishers were often more famous than their writings? 

Bloggers should heed Mark Cuban's warning that blogs lack journalistic brand. Separating quick clips from columns and features might be a good first step toward traditional credibility.

What do you think?

NEWS: Chinese Social Net Puts Facebook, MySpace To Shame

Chinese Social Net Puts Facebook, MySpace To Shame

QQ.jpgHow can social networks make money? Chinese Internet portal Tencent shows us one model. 

Last year Tencent, which operates a series of services under the QQ brand, posted $523 million in revenues and $224 million in operating profit (PDF). In the same year in which Facebook posted $150 million in revenue. And while News Corp. (NWS) says it is on track to wring $1 billion out of MySpace and the rest of its Web businesses, it's predicting much more modest margins of 20%.

So how did QQ make all this money? Only 13% of that $523 million was from online advertising. About two-thirds of total revenue came from Internet services like games and their virtual currency QQ coin (i.e. fake money bought with real money), and another 21% came from mobile services like ringtone downloads.

QQ has 300 million active accounts, basically the population of the U.S. (a lot of users there have more than one account). So that helps, too.

But maybe the answer for the American social networks is not to be social networks. QQ is basically an IM client with a social network built around it. Facebook itself is adding its own chat, as well as as its own currency, so there's still hope for Zuckerberg and Co. And maybe, just maybe, this augurs well for AOL's Bebo deal -- after all, AOL already has the dominant chat service.

Ed: Online gaming is hot in China. QQ is one of dozens of companies monetizing via gaming. 

Fiber to the home, alley of households, or gaming parlor costs about US$10.00 per month. China Mobile provides simple, available debit cards. Game players are heavily tariffed to discourage imports - making Internet play inexpensive entertainment. The infrastructure favors lease versus buy which is very different from western economies. 

NEWS: Social Site’s New Friends Are Athletes

Social Site’s New Friends Are Athletes

Photos and videos showing blue-chip athletes like Mr. Parker, LeBron JamesDerek Jeter and Peyton Manningwill be part of a new venture that C.A.A. and Pequot along with the Internet arm of Major League Baseball are expected to announce today.

The venture, WePlay.com, a social networking site for youth sports — something like Facebook for young athletes — is expected to start in mid-April. The site caters to youth athletes, parents and coaches — a vast audience. About 52 million children a year participate in organized sports leagues, according to the National Council of Youth Sports.

Ed: Passionate fans, but tough to execute with low tech coaches pushing the process. Of 300 local AYSO coaches, only 3 are using Facebook.

NEWS: CNET Cuts 10% Of Workforce

CNET Cuts 10% Of Workforce, Effective Immediately (Updated With Internal Memo)

CNET has announced that it will cut 10% of its workforce, or 120 people, effective immediately, in a move said to help it “focus on long-term growth amid complaints from some investors.”

CNET has had no shortage of headlines recently, from changes at the top through to an ongoing battle for control against largest shareholder Jana Partners.

According to an internal memo from CEO Neil Ashe, the restructure will include stronger emphasis on centralized services in areas like IT architecture, SEO, yield monetization, Facilities, Legal, HR and Communications.

Business Unit Realignment: with the introduction of an open API, “CNET will move its services, catalog, content management system onto one platform, making content development, syndication and content import easier and more open.” CNET has realigned its investments in TechRepublic and ZDNET “to improve monetization,” although exactly how and in what form was not specified. TV.com will be abandoning its emphasis on video for more (we presume low cost) content such as “entertainment features, breaking news, trivia competition, and polls.”

Mar 26, 2008

NEWS: Google February Paid Clicks Lousy (Again)

Google February Paid Clicks Lousy (Again)*

Google had 515mm US paid clicks in February, which is up only 3% year over year. At first glance, this appears to be a slight--slight--improvement from the horrific January report, which was flat y/y at 532mm clicks. However, Comscore did not adjust for the Leap Year (29 days vs 28), so this likely accounted for the entire increase.* Both months show a severe slowdown from Q4:

Oct: +37%
Nov: +27%
Dec: +12%
Jan: 0%
Feb: +3% [Does not adjust for Leap Year 29 days vs 28. Therefore pro forma 0%]

Our source believes Wall Street was looking for 5%-7% growth in Google's US paid clicks and that this report will likely cause the stock to trade down. For basic queries (versus paid clicks), Google US was up 31% and Google International was up 31%.

Ed: At $4 billion per quarter, clicks should be 2 billion per month.

View NEWS: Cookie Deletion Inflates User Metrics 

View NEWS: New Study Shows that Heavy Clickers Distort Reality of Display Advertising Click-Through Metrics 

View ANALYSIS: Internet Consolidation or Fragmentation?

ANALYSIS: Who Earns the Page View?

NEWS: The Twenty-Five Most Valuable Blogs

The Twenty-Five Most Valuable Blogs

1.The Gawker Properties: $150 million. Gawker, ValleyWag, Gizmodo, Wonkette, and a number of smaller websites. The company claims 30 million monthly unique visitors. According to audience measurement service Quancast, that number is fairly close. Compete shows that traffic to most of the large sites in the group more than doubled from a year ago. If the sites generate one-and a-half page views per unique visitor and the total CPM value of the multiple advertisers on each page is $20, Gawker is an $11 million business which is still growing quickly. The company does not appear to be staff-heavy, so it is imaginable that the margins on the business are 50%.  Would the business be worth 15x revenue or 30x operating profits? Could be.

2.MacRumors: $85 million.Blog knows more about Apple than Apple management does. It ranks No. 2,700 in Alexa. Compete shows 544,000 visitors and moving up quickly. Quantcast puts global unique visitors at 5.3 million. Page views at 33 million, which seems a bit high. Advertising looks high-end and solid, probably at least $30 per page CPM.  Business should do at least $12 million and have a high margin, estimated at 60%. At a 12x multiple.

3.Huffington Post: $70 million. Several websites commented that HuffPo might be worth $100 million when it raised $5 million late last year. Arianna Huffington said to Portfolio that the business was in the process of becoming profitable. In late 2007 management claimed that the website had 4 million unique visitors per month and would bring in $7.5 million for the year. The website is now in the top 1,000 according to Alexa and its ranking has been climbing, probably due to the election. Compete shows a similar trend with the website reaching over 1.8 million people in February, up 245% from the same month last year. The problem with the business now is that its value has probably peaked. The huge increase in visitors is likely to fall-off once the election is over. HuffPo has tried to building out other content sections, but it is likely that they cannot replace the visits from the core audience which visits the site for political comment. That means that the company will have all of the costs (40 or 50 people) and a falling number of visitors.  Revenue should actually begin to fall in 2009. With a business which is likely to shrink next year, it is hard to believe that the company is worth more than 10x revenue.

4.PerezHilton, 5.TechCrunch, 6-7. (tied) Ars Technica, Seeking Alpha, 8-10. Drudge Report, Mashable, GigaOm, 11. Boing Boing, 12. Silicon Alley Insider, 13. ReadWriteWeb, 14. Paidcontent.org, 15-16. Search Engine Land, Smashing Magazine, 17. DListed, 18.Daily Blog Tip, 19-20. Techdirt, Neatorama, 21-22. BuddyTV, The Superficial, 23. Talking Points Memo, 24. Travelpod, 25. 24/7 Wall St.

Mostly high tech and media focused. 

NEWS: Local Newspaper Trends

France: new print weekly aggregates online media content

Blablabla Hebdo.JPGA new local weekly paper hit the stands last Saturday north of France. Dubbed Blablabla Hebdo, the paper aims to offer a review of the week's media coverage - satirically.

The opening editorial is clear about the paper's view on news:

"We don't believe in 'news.' It's a journalists' invention. And it's precisely because there isn't 'real news', but only 'information', thousands of new bits of 'information' that are constructed daily, that it's of utmost importance to filter those bits."

The paper was founded by Stéphane de Rosnay and Frédéric Lafeuille. De Rosnay has already had experience as a freelancer for a publication with a similar concept, the Canard enchaîné.

Blablabla Hebdo covers media coverage, from print, through a lot of online news, to a bit of TV and radio.

The newspaper works as a content aggregator, mixing non-original content with some opinion. The print paper feeds upon a number of popular blogs and online news sites, including Rue89 and Bakchich.

According to the Calembredaine blog, despite Blablabla's ostensibly critical approach of media coverage, the paper does a good job of digging out stories that went off the mainstream media's radar.

Source: Calembredaine (link in French)

Metro International building city based websites featuring blog network

Free newspaper group Metro International is planning on building "an interactive capability" for all of its newspapers to target young professionals, with Metro France as the pilot launch, according to Brand Republic.

Each city based website will hopefully become, as Brand Republic describes, an "indispensable source of news and information", with a network of blogs on relevant themes and local perspectives.

Tom Symonds, Managing Director of Metro Interactive, said: "With this investment Metro will define its own space, where we not only draw on our users' appetite for relevant news and information but provide a space that is completely focused on urban living and increases the users' influence."

Vice-president of Corporate Development Christian Toksvig, who was hired earlier this month, is in charge of launching free Metro titles in new markets. Currently, Metro publishes 84 editions.

Eventually Metro wants a website for all the 23 countries it operates in.

The blog network can distinguish Metro sites from other local news sites for users. Instead of just browsing through news, users can browse through opinions or other relevant information on local news.

Source: Brand Republic

Street journalism: transmitting live video footage from your camera phone

camera-phone.jpgNo more waiting to upload a video onto a site. Several companies such as Qik andFixwagon are now offering software to accomplish "street journalism", a term used by BBC to describe the phenomenon of transmitting a live video filmed with a camera phone onto a site.

An Israeli television channel is conducting an experiment in giving camera phones to residents in Sderot and Askelon so they can have live evidence of missiles being shipped to their regions.

Leading bloggers already participate in street journalism by streaming live video footage of them attending conferences and of the supporters of American presidential election candidates, which they send to MTV online campaigns.

This is a new development that can bolster citizen journalism since people who are on site at events can immediately transmit their footage to the web, and in turn, viewers can receive on the spot coverage.

Source: Tribune de Genève (in French), Digital Photography School (image)

The end of local papers could mean the end of local news

The Long Beach Press Telegram started off helping expand the LA Times empire in the 1970s and 1980s. In the early 1980s, theLong Beach Independent, the Telegram's afternoon counterpart, printed its last edition. Now it may be time for the Press Telegram to print its final edition because of the declining newspaper industry.

Last month, the Telegram combined with its neighboring daily, the Daily Breeze to cut costs. In maintaining profits, journalists were bought off or laid off.

The city of Long Beach has already complained to Media News that the Telegram isn't doing a good job of reporting the news and has threatened to pull its legal advertising, which would result in the paper's demise.

Though the effects aren't as glaring in larger papers, they are in smaller papers such as the Telegram, according to Dennis McDougal, former Telegram writer. He believes that now, mistakes of reporters make it into the print more frequently and newspapers shy away from investigative stories. If local papers continue to disappear, there would be no substitute for local reporters covering local news everyday in a local newspaper.

Source: LA Times through Poynter Online

NEWS: AOL Ad Project, 'Platform A,' Plots Plan B

AOL Ad Project, 'Platform A,' Plots Plan B

Digital Effort Aiming 
To Unite Multiple Fronts 
Faces Various Obstacles
March 26, 2008; Page B6

Over the past two years, Lynda Clarizio has helped build Advertising.com, AOL's ad network, into one of the hottest properties in online advertising. Her reward: She gets to try to clean up one of the Internet company's messiest divisions.

[Lynda Clarizio]

Time Warner's AOL unit is aiming to transform itself from an Internet service provider into a full-service digital-advertising business. To that end, it has spent about $1 billion to buy seven ad-technology firms with different areas of expertise, from behavioral targeting to video ads. The next step is to knit them together with Advertising.com -- an entity AOL has dubbed Platform A, but has yet to take to market.

AOL's future largely hinges on the success of that transformation, which involves aggressively slashing costs, forsaking billions of dollars in overall subscription revenue, and laying off thousands of employees. Time Warner Chief Executive Jeff Bewkes has said that mission is key to plotting a new course for a company whose stock price has stagnated in recent years.

But Platform A is off to a rocky start. In its first six months, it has been marked by failed sales targets, tensions among its different business groups, and, most recently, the dismissal of its president, Curt Viebranz. A number of marketers say they are ready to spend their ad dollars with Platform A, but can't because the disparate units still operate independently.

The idea behind Platform A is that AOL can be a one-stop shop for placing ads both on AOL's own Web sites and on the broader Web, through its ad networks like Advertising.com, which sell ads on thousands of Web sites. So far, though, the company is a long way from that reality. AOL is fourth among the major Web portals -- behind Google, Microsoft's MSN and Yahoo -- in ad revenue, and the pace of its ad-revenue growth has also dropped off. AOL's ad revenue grew 12% in 2007, compared with 37% in 2006 and 38% in 2005, according to research firm eMarketer.


Even Advertising.com, a rare bright spot in AOL's business recently, is facing new pressures. A major part of a two-year deal with its biggest advertiser, Apollo Group's University of Phoenix, ended in January. Advertising.com was University of Phoenix's exclusive online marketing partner, managing its ad buys both on its network of sites and on other ad networks. The deal generated $215 million for AOL in 2007, up $58 million from $157 million in 2006, and accounted for 17% of AOL's ad-revenue growth last year. (University of Phoenix will continue to buy ads on the Advertising.com network, but decided to take its ad buying in-house.)

AOL's biggest competitors are developing their own ad networks, which will make life tougher for Advertising.com. "If I get the inkling they are not innovating, I'm going to look elsewhere and talk to Yahoo or any of the other Web giants," says Tom Hespos, president of Underscore Marketing, a closely held digital agency in New York.

AOL executives have picked Ms. Clarizio, 47 years old, to rescue Platform A, which has the widest reach of any ad network in the country -- reaching 90% of the U.S. online audience, according to comScore -- but isn't able to effectively sell across that spectrum yet. A nine-year veteran of AOL, Ms. Clarizio led the deal team that acquired Advertising.com in 2004 for $435 million. That unit has accounted for nearly a quarter of AOL's revenue and is one of the fastest-growing parts of the company.


Trained as a lawyer, Ms. Clarizio is known internally for an analytical mind and an ability to delegate. A graduate of Princeton University and Harvard Law School, she came to AOL from Washington law firm Arnold & Porter, where she was a partner for seven years and also worked as an AOL outside counsel.

While AOL is known as a relatively slow-moving, bureaucratic company, Advertising.com has developed a different reputation. "AOL has reinvented itself so many times. It is hard to keep track," says Adam Schlachter, senior partner and group director at Mediaedge:cia, a media-planning firm that is a part of WPP Group's Group M. "(Advertising.com) has been able to grow steadily, consistently and innovate."

Ad.com grew from a cramped townhouse on the outskirts of Baltimore, where brothers Scott and John Ferber opened a digital advertising company called TeknoSurf in 1998. Their idea was to piece together a network of Web sites where they would buy ad space, then resell it to advertisers at a premium. It changed its name to Advertising.com in 2000.

Ms. Clarizio tried to embrace Ad.com's start-up spirit. The company remained at its Baltimore headquarters, instead of relocating to AOL's Dulles, Va., base, 60 miles away. She dressed up for Halloween and competed in relay races.

She also has tried to get the company's various sales teams and engineers working on common goals. During daily 9 a.m. meetings in Ad.com's "War Room," midlevel executives discuss the previous day's results and chart the next day's goals.

Ms. Clarizio wants to replicate that culture at Platform A, which suffers from duplication among its sales, tech and other groups. Different ad units, for instance, call on the same clients -- in essence competing for the business. One of Ms. Clarizio's first moves in her new post was to announce a "leadership team" for Platform A. The new structure puts in place one sales team, one technology team, one product and operations team, one marketing team and one publisher-services team to cut across all the company's different ad units.

Some digital-advertising executives question whether combining sales teams is the right strategy. They fear Ad.com's emphasis on data-driven results will come to dominate Platform A, frustrating bigger-brand marketers used to the tailored campaigns they have gotten from some of AOL's ad-sales teams.

But Ms. Clarizio is moving full speed ahead with the integration. AOL also announced last week that it has integrated two of the companies that provided separate search-engine-marketing services -- Advertising.com and Quigo, a contextual targeting ad firm AOL acquired last fall. "It's an example of what we need to do across the board. It's definitely an iterative process and takes a lot of work to do that," Ms. Clarizio says.

Write to Emily Steel at emily.steel@wsj.com

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