AOL’s Ad Revenue Grows for the First Time Since 2008

 by Lauren Indvik

AOL posted advertising gains for the first time since 2008, according to its Q2 2011 earnings report out Tuesday. But the gain still wasn’t enough to bring the company back to profitability.

Global advertising grew 5% over the same period last year, driven largely by a rise in display revenues, which were up 16% in the U.S., as well as ads run on third-party networks such as ad.com, up 29%. Search revenues shrank 21%, reflecting AOL’s declining subscriber base and the sale of ICQ in July of last year.

Advertising gains were not substantial enough to make up for declining subscriptions to AOL’s Internet service, down 23% (some 3.4 million people still subscribe to the service, if you can believe it), nor revenues derived largely from mobile carriers, down 20%. AOL reported a net loss of $11.8 million and an operating loss of $5.8 million altogether.

The company is continuing to make substantial investments in Patch, its neighborhood news service, which entered 44 additional areas this quarter, bringing its total reach to 846 towns.

Although advertising revenues grew, AOL’s media properties, interestingly enough, did not experience any substantial traffic growth over this period. Average monthly unique visitors to AOL properties in the U.S. and AOL Huffington Post Media Group sites were up 1% year-over-year, suggesting that higher rates — rather than volume — are pushing the gains.

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