Investor’s Give Thumbs Down To AOL Inc. (AOL)’s New Five Year Plan
AOL Inc. (NYSE:AOL) provided a 2015 outlook that didn’t impress investors. The company discussed various investment projects lined up for this year and predicted that there will be some tough quarters ahead as the company builds its platform for future growth. AOL announced more salesforce layoffs and investment in six major areas, mostly in content brands. While these projects are expected to pay off in the long-run, they will have an adverse impact on revenue in the short-term.
AOL predicted that 2015 revenue would be adversely affected by 2%, mostly because of the salesforce restructuring, relaunch of the systems pertaining to One By AOL and currency translation impacts. Restructuring of the salesforce is particularly expected to adversely impact 1Q and 2Q.
Investment in content and ad solutions
Tim Armstrong, the CEO of AOL, Inc. (NYSE:AOL), identified six main areas where they intend to put a lot of money in 2015. Such areas include programmatic advertising and content brands such as TechCrunch and The Huffington Post.
AOL is also turning to more programmatic advertising solutions as a way to put more power in the hands of the advertisers and also cut expenses on its sides. Armstrong cited that they were out to create a platform that can drive significant growth, and one of their strategies is to differentiate their services.
Opening up AOL platform
One major way that AOL, Inc. (NYSE:AOL) has considered to set itself apart from other providers is creating an open platform for advertisers and publishers. For example, while other providers dictate to advertisers, which third-party ad solutions they can use to achieve targeted ads, AOL wants to allow advertisers to bring their own data for ad targeting. The company wants to create something like an app store for advertisers and publishers so that they can easily target their ads and also measure the progress of their strategies.
If all goes as per the plan, AOL, Inc. (NYSE:AOL) anticipates huge costs savings, starting with eliminating nearly $130 million in operating expenses this year. The company also expects to push profit margins up to at least 10% in 2015. However, as already cited, the gains will come after some really tough quarters in 2015.
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