Markets

HuffPo or No, AOL Needs to Reinvent Itself By Committing Brand Suicide

By Catharine Taylor

Updated on: February 7, 2011 / 4:35 PM EST / MoneyWatch

Now that AOL has finished gobbling up The Huffington Post, here's the next thing it ought to devour: itself.

The flailing online media brand bought the HuffPo for $315 million in the wee hours this morning as part of its ongoing -- and so far unsuccessful -- attempt to recreate itself. But when applied specifically to the AOL brand name, that's a fool's errand; the best route to reviving the AOL brand is to let it to fade to black -- to come up with a new holding company name and then let the rebuilding begin.

Why? Because I can't think of any online media brand that has successfully reinvented itself, and, despite its acquisitions of top content brands like the HuffPo and TechCrunch, there's no reason to think AOL will be any different. Remember Myspace? Compuserve? Friendster? Excite? The world is not kind to once-hot technology companies, which often go in and out of fashion faster than a pair of Manolo Blahniks.

A $315 million head fake?
In fact, what makes the HuffPo acquistion so noteworthy is that it comes immediately after yet another quarter of absolutely disastrous results at AOL: display ad sales were down by 29 percent; search and other contextual ads declined by 34 percent. (Meanwhile, the online ad market overall is booming, showing a 17 percent gain in the third quarter of last year.) Hmmm, so maybe this HuffPo acquisition was a $315 million head fake. Hey, everybody, look over here!

Seriously though, the AOL brand is lacking credibility, not only with consumers, but with advertisers. I spent most of last week chairing a social media conference in Florida -- and when the subject of AOL came up among attendees, it mostly elicited sad headshakes, often in mourning for Advertising.com, the online ad network that used to be one of AOL's crown jewels. Consumers? They've voted with their clicks; it doesn't take an online expert to tell you that people are spending more time on social networks, which has hurt portals.

Some diamonds in the rough
But not entirely. Some of the content brands AOL owns -- when looked at apart from AOL -- have real momentum in the online marketplace. HuffPo, obviously, is one of the leading news sites. TechCrunch remains one of the most trafficked sites in the very crowded Silicon Valley blogosphere.

And anecdotally, at least, Patch -- AOL's network of hyperlocal content sites -- seems to be gathering buzz. My town's site just opened and I'm quite surprised at how hungry the market is for a daily stream of local news. You'd think a town of 12,000 people would find that a weekly newspaper would suffice.

The hard part is that AOL is counting on the aggregation of all of those eyeballs to gain advertiser share. It would be a mistake not to bring that scale to bear on AOL's ad revenues. Still, the shelving of the AOL brand would be the best way to accomplish what really can't be -- and that is for people to look differently upon the three letters A, O, and L.

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