AOL Reports Stronger Ad Sales

AOL reported a strong third quarter on Tuesday, helped in large part by improved ad sales.

Global advertising revenue increased 7 percent, to $340 million from $317.7 million, in the latest quarter, compared with the same period a year ago. The company had an 18 percent increase in revenue from third-party ad networks, including the company's network, Advertising.com, and and 8 percent increase in search and contextual advertising.

“We have positioned AOL for growth in 2013 and beyond with consumer and advertiser demand growing for our premium content and innovative products, video, services and ad formats,” Tim Armstrong, the company's chief executive, said in a statement.

But not all the advertising news was positive. Revenue from display advertising in the United States fell 3 percent, to $122.5 million. Revenue from international display sales rose 18 percent, to $12.9 million, which reflected growth in Canada and Britain, the company said.

Over all, AOL reported revenue of $531.7 million, which was flat compared with the same period last year. The company's earnings were $20.8 million, versus a loss of $2.6 million a year ago.

Shares in the company jumped more than 14 percent on Tuesday.

In a conference call, Mr. Armstrong said the advertising business was “an area of strategic importance,” for AOL and was split into two areas - programmatic or automated buying and “deep marketing services,” to create customized solutions for advertisers. Mr. Armstrong said he expected programmatic buying to grow significantly next year, and added that that the company had invested in technology and staff to expand that side of the business.

The use of the the AOL brand advertising platform, Project Devil, which allows advertisers to occupy all the advertising spaces on a Web page, had grown at “double digit rates,” and repeat usage of the platform by advertise rs was “very strong,” the company said in a statement.

Mr. Armstrong acknowledged that the domestic display advertising results were “not as robust as we would like.” But he said the company planned to improve traffic across all of its brands and invest in more lifestyle brands on The Huffington Post, which would allow advertisers to better target users with contextual ads.

“The majority of our advertising revenue comes from the traditional display business over all,” Mr. Armstrong said. However, programmatic buying and specialized marketing services were growing quickly, he said, and “at some point in the future they will overtake the traditional display business.”

Many AOL sites were buoyed by recent news events, including Hurricane Sandy on the Eastern Seaboard and the presidential election. Mr. Armstrong said. The company's network of hyperlocal news sites, Patch.com, ran 14,000 articles and blog posts and 7,000 to 10,000 photos and vide os about the hurricane. The hurricane also drew “hundreds of millions of page views” for The Huffington Post, Mr. Armstrong said. “Traffic has exploded with Sandy.”

In addition to programmatic buying, Mr. Armstrong said he expected that advertising dollars would shift to digital video from television and that mobile advertising would increase. “I would expect mobile usage to grow and I would expect mobile advertising to grow,” he said.

Revenue from the company's dial-up Internet subscriptions declined 10 percent in the quarter, to $173.5 million from $191.9 million.

The company has been on something of a hiring spree, with 700 new AOL staff members hired in the last seven months, Mr. Armstrong said.