AOL is in a dreadful state of affairs with Randy Falco and Ron Grant (aka “Smithers & Burns”, a snarky insider reference to characters on The Simpsons) now running the show. I said last year that AOL was moving away from access into advertising, that Falco did not understand the Internet or any aspect of AOL’s business, and I always thought that tiny Ron Grant, (i.e. “Falco’s brain” or some such thing) was fairly clueless. I haven’t called it wrong yet, so love me or hate me, don’t say I never gave you a good (and early) warning.
Time to watch the ship start sinking; AOL can’t bail out much longer. Breaking news at the Washington Post quotes Rob Enderle, a principal analyst for the Enderle Group, saying that unless AOL becomes more competitive, “this property will be without value by this time next year.”
AOL had its worst quarter since changing its business model last summer to regain money lost from over 14 million fleeing subscribers. Giving away free access to AOL’s software and premium content while attaching ads to member’s inboxes and emails was supposed to staunch the painful flow of lost dollars. For a while the ad-based model seemed to have some hope. AOL claimed profits rose around 40% for each subsequent quarter, but profit rose just 16% last quarter, and past examination proves most of the increase was from advertising.com, an AOL subsidiary that places ads on third-party websites, not on AOL’s.
AOLers, say hello to Big Brother. Your privacy on the Web is over with. In stunning news this week after a backlash against AOL’s data leak of nearly a million user’s search records, AOL has acquired Tacoda, which uses technology to monitor client’s customers so you can see lots of “personalized” ads.
So how does Tacoda work? The way most adware and spyware programs do. They monitor every website you visit, whether it’s an AOL property or not. The information is collected and analyzed to see which sites you visit the most. Advertising is delivered based on the results. Say you visit a lot of websites about flowers; you’ll see lots of gardening ads. Every possible “interest” of yours is analyzed so you’ll see ads that lead you to buy from as many of AOL’s ad partners as possible.