AOL's Tim Armstrong on the Value of Premium Online Content

(MoneyWatch)  So, as promised, I've listened to all three parts of Ad Age editor Jonah Bloom's interview with new AOL CEO Tim Armstrong, and will now tell you about the most interesting part: Armstrong's thoughts on whether the Internet can support quality content. Said Armstrong:

The answer is yes, I think that content on the Internet will be able to be monetized in a way that is actually respectful of the level of content that actually gets pushed out. And I would go back to the fact that brands are really important. Over the course of time I haven't met many advertisers or agencies that want to attach themselves to brands that are beneath them in terms of the ranking order of brands.

Armstrong's thoughts underscore the cold, hard truth of what's currently going on in online media: we're currently seeing an ongoing devaluation of online advertising -- and display advertising in particular -- caused not just by the recession, but also by other factors -- including the long tail's ceaseless upping of supply and the rise of ad networks to efficiently sell remnant (read: cheap) inventory. The evidence is all around us, if we just look hard enough. It explains, for instance, how the New York Times Web site can show a seven percent increase in traffic last month compared to a year ago, and still see an eight percent decline in first quarter ad revenue in its News Media group, even as Internet advertising, relative to other media, remains stable. Armstrong thinks AOL's content is undervalued:

I know this from being [at AOL] for three weeks and seeing the numbers. People are not paying enough to put their ads on AOL content and that's a problem for us to solve. We have to prove to advertisers that our brand is actually above where it is.

It will be fascinating to see, if, and how, Armstrong manages to charge more for AOL's ad units. Based on other parts of the interview, I'd speculate that much of his pitch is going to rely on data, which is, of course, a quite Googly way of looking at the world. His belief is that AOL, and Internet publishers in general, are not sharing enough of the insights sitting on their servers. Though he didn't come right out and say it, the more advertisers know about how well a media property is performing for them, the more they will value it.

UPDATE: Yesterday, Armstrong hired a Google colleague, Jeff Levick, as president of global advertising and strategy.