Time Warner Warns That AOL May Miss Revenue Targets Due To Ad Slowdown
This story was written by David Kaplan.
AOL's (NYSE: TWX) Platform-A, plagued by slowing ad growth, might miss its revenue targets, Bloomberg reports Time Warner CFO John Martin as saying at Merrill Lynch's investor conference. Up until recently, Martin said, ad revenues were growing like "a weed." But lately, marketers have been pulling back. He told attendees at the Marina del Rey, Ca., conference: "It gives us pause in terms of our confidence to ramp advertising in the back half of the year.''
In August, Platform-A forecast that ad revenues would continue to rise through the end of the year. But now the ad slowdown has added to pressures on AOL, which has been dealing with the process of integrating the various ad firms it bought over the past year under Platform-A. As a whole, AOL posted a weak Q2, reporting a 15 percent decline in revenue to $1.05 billion and operating income dropping to $230 million from $350 million, due to a 29 percent decrease related to the the loss of subscription revenue. As for the portal side of AOL, which just unveiled a revamped homepage, is seen as one way to bring ad growth back.
-- Marketwatch: On the bright side, AOL's profit margins seem to have stabilized, Martin said. But margins are higher on the AOL's access side, partly because Time Warner hasn't spent a great deal of marketing dollars there.
By David Kaplan