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AOL Really Is an Ad Tech Company With Big Rise in Third-Party Revenue

Ad tech rules -- again.

So, AOL is really an ad tech company.

While total third-quarter ad revenue increased 18 percent to $473 million, much of that was driven by AOL’s third-party ad group, the division that helps publishers and marketers buy and sell ads through its video and display networks. It’s AOL’s fastest-growing business, rising 44 percent to $215 million in the quarter and now making up 45 percent of all advertising.

That’s interesting, since CEO Tim Armstrong’s turnaround strategy not too long ago was all about original content, which is a much smaller business now. Since last year, he has refocused the company’s efforts on ad tech, buying companies like which uses software to match video publishers with ad buyers.

As for AOL’s content sites, which include TechCrunch and the Huffington Post, sales dropped three percent to $187 million, largely because it no longer has Patch, the local news division it unloaded at the beginning of the year. But even when comparing just the content sites it owned for the same period a year ago, display ad revenue rose only one percent. So content isn’t really AOL’s growth business; it’s only getting smaller.

Armstrong noted in a brief interview following the earnings report that AOL’s video network is also helping to drive ad sales for its owned properties and that producing more original video will still be a big part of its ongoing content strategy.

The stock took a dive of about four percent during the company’s earnings call when executives indicated the current quarter’s performance may not compare as favorably to last year.

Total third-quarter sales reached $626.8 million, a little above Wall Street’s expectations of about $623 million, while its profit, excluding some one-time items, was in line with estimates at 52 cents a share.

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