Desperation? Aol moves to consolidate

aol logoTechCrunch is reporting that its parent company, Aol, is consolidating brands, which is contrary to its previously stated “anti-portal” strategy. This smells to me, but let’s look at what TechCrunch is reporting. Aol is moving from 53 content brands (the company originally wanted over 100) to 20 “power brands.” Here’s the nut of the story:

“More and more stuff is moving towards well-known brands,” says (CEO Tim) Armstrong. “Unless human nature is going to totally change, the Internet is going to end up in a branded environment.”

The Huffington Post will be absorbing many of the former stand-alone AOL editorial sites, and in the process expanding from 28 sections to 36. Armstrong believes that simplifying AOL’s content portfolio will make it easier to sell ads and attract readers. Instead of “300 different things that sales people could sell, now they can focus their sales efforts against key categories.” (emphasis mine)

A couple of things to point out. “More and more stuff” is hardly empirical justification of anything, much less such a big strategic shift. Tim Armstrong is a man with a big gun at his head, and it’s name is “immediate revenue needs.” So he needs money, and he needs it now. What he really needs is easy money, and that’s what’s dictating this strategic move. I don’t think it’s smart, but then I don’t need lots of money quickly.

The admission that consolidation will make things “easier” for sales people is absolutely true. Madison Avenue likes things simple, because Madison Avenue is interested in, well, Madison Avenue, not necessarily in the people footing the bill. Efficiencies gained in doing deals puts more money in the pockets of the agencies but have nothing to do with actual commerce. An agency representing, say, Nissan wanting to “buy” inventory in Baton Rouge will usually grab the top two media properties in terms of reach, so size matters. It’s the way things generally work, and Armstrong is just helping that process. Madison Avenue is the world of commodified ads, inventory and mathematics. Innovation tosses a sizable monkey wrench in the mix, and that will ultimately be its doom.

The problem for everybody is that advertising is changing. Old formulas for mass marketing don’t work online, because, among other things, not all inventory is created equal. Then there’s the no-so-tiny issue of banner blindness, something Madison Avenue can ill afford to even consider. Aol’s anti-portal strategy was smart, because it recognized targeting as king. It’s many brands provided unique data to offer highly-targeted advertising, but selling that is more difficult than selling simple reach to people who don’t care about anything other than making their numbers and doing so efficiently.

As long as that’s the central mission of Madison Avenue, moves like this will be rewarded. I believe, however, that this is only temporary, and that smart media players need to be investing in other forms of commerce-enabling advertising concepts.

The whole mass media marketing machine is a house of cards that will one day collapse under the weight of its own self-interest.



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