Though it's no longer a part of Time Warner, AOL is still serving America online. The Web portal serves users with an array of content and communication tools, including sites for news (TheHuffingtonPost.com), maps (MapQuest), entertainment (Moviephone), local information (Patch), and technology (Engadget and TechCrunch). AOL primarily earns revenues through display, search, and contextual advertising (AOL Advertising) sales. It sells ads on AOL Properties as well as its Third Party Network (third-party sites). Search is provided through a deal with Google. AOL still offers dial-up Internet access to 3.3 million subscribers in the US. Time Warner spun off AOL to shareholders at the tail end of 2009.
AOL trails rivals Google, Yahoo!, and Microsoft as the fourth largest Internet portal in terms of unique US visitors to its site. During its second year as a newly-independent entity (following its separation from Time Warner and a restructuring that led to a massive 2,500 job cuts), AOL's business strategy continued its focus on showcasing original, advertising-supported content. In 2011 the company reported a slight drop in revenues due to a more than 20% decline in subscription sales. However, advertising sales were up, and AOL's net income swung to a profit of more than $13 million, up from a loss of about $782 million the prior year.
In efforts to turn the business around while beefing up its ad-supported content holdings, AOL completed a major acquisition in 2011 when it purchased TheHuffingtonPost.com for $315 million in order to boost content and drive new users to its site. (TheHuffingtonPost.com includes coverage of news, politics, and entertainment topics, as well as celebrity blogs.) Before the deal, TheHuffingtonPost.com attracted around 25 million visitors each month, and together with AOL the two now attract about 110 million visitors.
After the TheHuffingtonPost.com acquisition closed, AOL laid off some 900 employees, representing about 20% of its total workforce. The cuts included 200 jobs in the US and 700 in India. (The Indian jobs consisted mostly of back-office support staff.) The reduction was designed to reduce redundancies between AOL and TheHuffingtonPost.com. AOL then created the Huffington Post Media Group to house its growing portfolio of online content and local businesses.
AOL also folded about 30 of its 70 websites to eliminate overlap of content. The job cuts were also conducted to change AOL's staff composition. Before the layoffs, about half of its workers were in editorial or other content divisions; the cuts moved that figure to 70%. AOL's dial-up business, which currently accounts for about 36% of its revenue (down from 42% in 2010), continues to decline. In 2011 the company reported that the dial-up business segment has only a few years of life remaining.
In the online advertising and marketing services segment, AOL continues to trail its rivals, such as Google, 24/7 Real Media, and ValueClick. The company's advertising strategy is to lessen the number of ads on AOL sites in order to reduce clutter on pages and make them load faster. It also offers premium advertising formats that focus on aesthetic quality, impact, and interactivity. In addition, it is growing its presence in the local online ad market by investing in its Patch Media service, which provides local information and services for towns and communities. At the end of 2011, AOL reported the Patch.com's network of local news websites had grown to more than 860, up from about 790 outlets at the end of 2010.
Google powers AOL searches through a partnership that extends through 2015. As part of the agreement, Google also provides AOL with mobile search, and brings AOL's video content to Google's YouTube. In 2011, about 15% of revenues came from Google, nearly all of which were search and contextual revenues generated on AOL Properties. – less