Few weeks ago, we learned about how each websites are linked to others and how we rank these websites by giving websites authority scores. We also learned what web advertising is and how it works. There was an article that talked about how AOL re-strategizing its revenue resource by focusing on advertisement revenue in Europe. In class, we also briefly learned about Google and how it became a web giant in a short period of time. From this article, again, presence of Google in web service industry was evident. While Google generated huge revenues by attracting more than 160 million users, AOL managed to only attract 31 million unique visitors to its European Web sites last month. In the U.S., AOL already owns Advertising.com, an agency based in America that buys online media owners’ advertising space and selects ads to fill it.

According to this article, AOL is beginning to sell its the access businesses in Britain, France and Germany. Doing so, AOL is pocketing nearly $2 billion but losing control over its primary source of international revenue. In place of all that revenue from Internet access, AOL has some new partners — Telecom Italia in Germany and Neuf Cegetel in France — in addition to Carphone Warehouse. AOL, after selling its access businesses, will run more co-branded web sites for its partnering companies. As a result, it will sell advertisements and provide huge portion of the company’s revenue. The next strategy for AOL will be to expand the European audience to its free AOL web sites in Eruope and turn them into a larger advertising venue. As expected, AOL agreed to buy TradeDoubler, a Swedish company that matches Internet advertisers with online media owners and e-commerce sites. This clearly shows AOL tries to grab a bigger share of the booming global market in Internet advertising.

As more users visit AOL run or co-run websites, advertisers will be willing to pay more for the advertisement. Also, there will be more advertisers who will fight to win the advertisement availability. Hence, AOL will be able to generate more profit and hence, more revenue. Nonetheless, Google seems to be running away with its title as the #1 web search engine. Again, as stated before, Google managed to attract more than 5 times than the total AOL visitors. The gap between AOL and Google is significant and AOL will need to devise an alternative strategy that will attract more visitors. To me, it seems like AOL is simply popular because of its online-chatting system. However, as technology becomes advanced, websites like meebo.com provides users to go online without download the chatting software program from AOL website. Also, Google produced its own online chatting program called GoogleTalk. Web service industry seems to be becoming more competitive day by day.

AOL prove to the right thing by gearing its revenue source to advertising fees because in today’s world, many have an access to internet and use it on a daily basis. Internet advertising is growing more than 25 percent a year, according to media buying agencies. Online shopping is becoming popular day by day and I am sure all these company that provide online shopping services want to advertise their services putting up an advertisement on popular websites such as Google, Yahoo, and AOL.

Source:
http://www.nytimes.com/2006/10/23/technology/23aol.html?_r=1&scp=1&sq=AOL+to+Focus+On+Ad+Revenue+In+Europe&st=nyt&oref=slogin

http://query.nytimes.com/gst/fullpage.html?res=9C07E6DA1030F935A25752C0A9619C8B63&scp=2&sq=AOL+to+Focus+On+Ad+Revenue+In+Europe&st=nyt