AOL CEO Armstrong Aims to Lift Mobile-Advertising Revenue to More Than 10%

By Danielle Kucera - Dec 2, 2011 6:38 AM GMT+0700

AOL Inc. (AOL) aims to boost its mobile- advertising revenue into double digits as a percentage of the Internet company’s total ad sales in the next 18 months, Chief Executive Officer Tim Armstrong said.

Advertising on mobile devices now makes up a “tiny” percentage of sales, Armstrong said in an interview today. In a note to company executives on Monday, Armstrong said, he outlined a goal to increase ad revenue for AOL’s mobile segment to 10 percent or more of overall ad sales.

Armstrong needs to bolster earnings in online advertising as AOL’s profitable Internet-access business declines. The New York-based company posted a net loss of $782.5 million last year as it struggled to compete against Google Inc. and Facebook Inc. To woo advertisers, AOL is seeking to offer new ways to target consumers, Armstrong said.

“We’re very, very small right now in mobile,” said Armstrong, who took the helm in 2009. “The opportunity is there, and we’ve got to get really organized around it.”

AOL fell 2.9 percent to $13.92 at the close in New York. The shares have declined 41 percent this year.

Advertising increased to 60 percent of revenue in the third quarter, compared with 52 percent of sales the previous year. All AOL products and services will eventually have a goal in mobile, some in consumer usage and some in revenue growth, Armstrong said.

Mobile advertising is likely to be a “heavy M&A” space as companies work to make money on customers that switch to smartphones, Armstrong said. AOL is also seeking to get business from video advertisers, he said.

“Video looks like a faster total revenue opportunity,” he said. “Mobile is a faster opportunity to grow, percentage-wise. We’re doing it ourselves right now, but I wouldn’t rule out that we’re going to be aggressive” in acquiring companies, he said.

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net