When Tim Armstrong took the reins at AOL in
2009, he had a clear plan: AOL was going to be a top-notch digital content
company that would lure premium marketers to its properties. He put the
company’s considerable cash pile to use acquiring TechCrunch in 2010 and the
Huffington Post in 2011. But somewhere along the way, Mr. Armstrong saw the
ground shifting in the digital advertising business, and smelled an
opportunity. Advertising was about to become more “programmatic”—that is,
bought and sold through powerful software driven by rich data.
When Mr. Armstrong arrived at AOL, he had just enjoyed one
of the more charmed runs in advertising, serving as the president of Google Inc.’s
Americas operation during a period when search-advertising exploded. AOL was
searching for an identity. It had played the role of scrappy startup in the
dial-up Web access business, Internet poster child, and eventually participant
in the biggest and most catastrophic attempt to blend content and
distribution—the ill-fated $165 billion merger with Time Warner. After
being spun out from Time Warner, the company was trying to find a role in
a world where mobile devices and social media were on the rise, and
ad-supported online businesses were once again in vogue.
Mr. Armstrong arrived at AOL following the “Randy and Ron”
era, when AOL was run by former NBC executive Randy Falco and former
Time Warner executive Ron Grant. Among the duo’s most famous moves was
spending $850 million on the social network Bebo—which was eventually sold back
to its founder for $1 million years later.
AOL insiders describe Mr. Armstrong as someone who loves
inspirational talks and metaphors. The 44-year-old speaks of how AOL is going
after “blue oceans” and “white space,” and calls its balancing of content and
automated advertising a “barbell strategy.” His management style has come under
scrutiny at times. During an internal company conference call in 2013, he fired
an employee in front of hundreds of people—an episode that got tremendous
public attention because audio of it was leaked.
Mr. Armstrong noted that AOL’s stock price has appreciated
147% since he took control of the company, outpacing the S&P 500. When AOL was spun off from Time Warner in
2009, its market value was at around $2.5 billion. Verizon is paying $4.4
billion six years later. But AOL’s share of the $50 billion digital-ad market
in the U.S. was 2.1% in 2014, according to eMarketer, down from 2.3% in 2013.
Despite AOL’s weak points, Verizon CEO Lowell McAdam saw
big opportunity in a tie-up. The companies began their flirtation last summer
at the Allen & Co. media conference in Sun Valley, where they were
exploring a possible joint venture involving content and programmatic advertising.
Nowadays, Mr. Armstrong speaks less about content and more about boldly
challenging Google and Facebook in the battle for ad-tech supremacy.
Click
here to access the full article on The Wall Street Journal.