AOL CEO Tim Armstrong discusses Web site traffic and online advertising growth

On the Call: AOL CEO discusses Web traffic, ads

SAN FRANCISCO — AOL Inc., which on Wednesday issued its first quarterly report since its separation from media conglomerate Time Warner Inc. in December, is struggling to keep up traffic to its Web sites — something it needs if its online advertising business is to grow.

The Internet company, initially known for its dial-up Internet business but more recently pursuing a role as a content and advertising business, said the average number of monthly domestic visitors to its stable of Web sites and online properties fell 8 percent in the fourth quarter. It was a continuation of an ongoing trend.

The company’s number of dial-up subscribers also fell 27 percent to 5 million.

Meanwhile, AOL’s advertising revenue declined 8 percent — a smaller drop than during the first nine months of the year, a positive sign.

During a call with analysts discussing the results, CEO Tim Armstrong responded optimistically to an analyst’s concerns about falling traffic.

QUESTION: The number of subscribers to your dial-up Internet service and visitors to your Web sites continues to fall. How will this impact online advertising growth, and display advertising in particular?

ANSWER: “I think you will see fluctuations in unique visitors, and potentially visitors will go down or up throughout the course of the year, mainly because we continue to change the properties that we currently have. I think you’ll also see us add and subtract properties from our mix this year.

“… I would just say in relation to your specific question around how does that affect advertising: I believe the advertisers are confident in AOL’s content strategy. I believe they are looking for us to improve and grow certain properties, and I think our focus this year is will we have growth overall from unique visitor standpoint. I am not 100 percent sure. I think we will get through that as the year goes on.”