If I were AOL CEO Tim Armstrong for one year… (AOL)

By: ispeculatornew
Date posted: 12.22.2010 (5:00 am) | Write a Comment  (9 Comments)

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With the holidays around the corner, we decided to do a mini series about a few of the tech stocks that we follow all year long. We are the first ones to judge and critic how these companies are run but as they say, it’s always much easier to critic it then actually run a company. So we decided to go ahead and write a series about what we would do with these companies. Hoping you will enjoy the series:

Dec 20    If I were Google CEO Eric Schmidt for one year…
Dec 21    If I were Yahoo CEO Carol Bartz for one year…
Dec 23    If I were Facebook founder Mark Zuckerberg for one year…
Dec 24    If I were Apple CEO Steve Jobs for one year…
Dec 27    If I were Ebay CEO John Donahoe for one year…
Dec 28    If I were Amazon CEO … for one year…

Management in the past few years

AOL used to be a dog in my opinion and even as recently as a few months ago, I would include AOL and Yahoo in the same sentence as IAC Interactive as the worst managed web companies out there. Tim Armstrong’s arrival as CEO has certainly started to change my mind on AOL’s future and it’s much clearer to me where AOL is now headed and the focus has certainly been one of the big reasons why I will probably be going long on AOL in the near future. Acquisitions like TechCrunch, one of the most valuable blogs, are reasons why I believe that AOL is headed in the right direction. It remains a challenging business and a fairly complex one but I do have faith in Tim Armstrong’s leadership.

AOL is a very decentralized company so judging it on the traffic at AOL.com would be very misleading. One of the most promising areas for AOL is Patch.com, its network of local websites which has been growing like crazy and could become the leading effort for AOL in the battle for local traffic. Just take a look at this stunning traffic chart:

General Vision

AOL should be the leader in hyper targeted and hyper local websites with a twofold focus: High quality content and a leader in online Advertising.

Initiatives/Priorities I would get started on in terms of content

Keep Patch in high growth mode: Patch.com is growing amazingly quickly and I personally still have some questions about the cost structure, I think AOL is doing the right thing in keeping the roll out pace frantic. AOL needs to take over the market before others like Yahoo can react and figure out the revenues and costs later on.  The structure and strategy looks sound so far

Start developing premium content on key properties: Some properties could be structured in a way to give users extra content for a monthly fee that could add to AOL’s recurring revenues.

Add a Sports Network: AOL does have some sports properties such as FanHouse but I think it could eventually take much more of a leader role and compete with ESPN.com. It will be a long term project but I think AOL has everything required in order to make it work.

Buy Yelp ($265M): Yelp information, sales force and user base could easily be integrated with Patch in order to consolidate itself as the top local network.

Buy EveryDayHealth ($460M): It is one of the leading “health” blogs and seems to fit perfectly within AOL’s strategy

Buy Sugar Inc ($250M): AOL  continues to have a lot of cash to spend and I would concentrate on getting more high quality content in order to optimize the advertising efforts & technology. Sugar Inc is a leading network and would fit very well within AOL’s strategy.

Buy the Huffington Post or NY Times: These are both very difficult and expensive acquisitions but if it makes sense for one company to buy them, AOL is the one in my opinion. It would be able to leverage its technology and advertising sales force to optimize the return on both investments. The NY Times would be a very intriguing combination and would certainly result in a very much improved web strategy for the legendary newspaper.

Initiatives/Priorities I would get started on in terms of advertising

I think the key point for AOL would be to quickly get access to better advertising technology and a superior sales force in order to offer the best solutions for online advertisers. I think AOL is well positioned to compete with Google, Microsoft and Yahoo for the big names such as Coca-Cola and GM.

Acquiring Tremor Media, Valueclick and Quinstreet would give AOL an edge in order to best profit from its network of properties in an optimal way.

Any thoughts or ideas?

I would love to hear your thoughts or ideas regarding all of these initiatives!

Disclaimer: I am currently short AOL

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9 Comments

  1. Comment by Zavi — December 22, 2010 @ 2:59 pm

    I really like the series!! That’s really interesting! I think that buying Techcrunch and keeping Patch in growth mode shows the new direction AOL is taking: Adding premium content is key! Let see how it goes!!

  2. Comment by IS — December 23, 2010 @ 3:58 am

    @Zavi – Thanks a lot for the good feedback:)

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  6. Comment by Wendy — December 27, 2010 @ 11:58 pm

    I believe MapQuest is going to be a big player in 2011 for AOl’s strategy. Love the new user interface.

  7. […] from Intelligent Speculator presents How we Would Run AOL For a Year, and says, “A discerning summary of how we would run AOL if we were in […]

  8. Comment by Zavi — February 7, 2011 @ 11:32 am

    Great job: Buy Huffington Post. Check!

  9. Comment by IS — February 7, 2011 @ 8:19 pm

    Thanks Zavi!!!

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