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As an early sales exec at Google, Tim Armstrong was well paid, but itchy for a bigger challenge, so he left to run AOL. Now, as the chief of both AOL and Yahoo under Verizon, he has the challenge of a lifetime: Making an ad business work when Google and Facebook are taking all the ad dollars.
“I think the worst thing we could do is — Facebook and Google are Olympic athletes with gold medal performances,” Armstrong said on the latest episode of Recode Media with Peter Kafka. “We have a differentiated strategy to partner with Google and Facebook, but not directly compete with them.”
Instead, AOL and Yahoo — which are collectively known as Oath — will find ways to give advertisers things the big steamrollers can’t. But Armstrong isn’t revealing much about his unique solutions, yet.
“I’m not going to go deeply into our strategy, but we have a different distribution model, different measurement model and different data model than they’re building,” Armstrong said. “I think you will see us, over the course of the next 12 months, roll out a series of products that are differentiated from Google and Facebook.”
“This is also not a winner-take-all market,” he added. “As big as those guys are, and they are big and they are ferocious from a competitive standpoint, there is so much opportunity left in the world.”
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On the new podcast, Armstrong also reflected on how Google got into advertising in the first place — because even though ads are an $80-billion-a-year business for it now, that wasn’t always how it made money. Google initially licensed its search engine to other companies, until Yahoo undercut that business entirely.
“Yahoo bought two companies and then started giving search licensing away for free,” Armstrong recalled. “We were able to get some of the best engineers at Google, who were working on search licensing, to come work on ad models.”
“And by the way, there was a lot of tension inside Google because ads can be distracting on search results,” he added. “It took us a long time to figure out how to do them properly. It wasn’t like, ‘Oh, great, we have advertising.’ It was like, ‘Oh my God, we’re going to have to put ads on the pages now’ and there was a lot of tension about that inside.”
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This article originally appeared on Recode.net.
