Strategic Execution: AOL Plans to Emphasize 'Brand' Over Content, Whatever That Means

Anyone remember the Joe Walsh hit song "Life's Been Good?" The signature line was 'I stay at parties sometimes until 4; it's hard to leave when you can't find the door.' Kind of reminds me of AOL's head-spinning strategic changes. These problems signal the difficulty any business has when it has been eclipsed by younger, more tech savvy rivals. Perhaps AOL's leaders will figure it out, but the history is not encouraging (Yahoo! or MySpace, anyone?).

The larger question is whether these latest moves are in response to the Huffington Post acquisition or are one element of a considered strategy developed before the acquisition took place. One hopes it is the latter, but the number of layoffs and the fact that this is something like the third strategy considered in the last 12 months or so does not bode well.

Erik Sherman reports in BNet:

"Last week, AOL gave 900 employees the heave-ho to pay for its acquisition of the Huffington Post. Now, as Kara Swisher at All Things Digital reported, the top editors of Engadget have quit. But from what BNET has learned from a number of sources about internal meetings that CEO Tim Armstrong and Arianna Huffington had last Friday with the surviving employees, the strategic direction and new organization could help spread that anti-management sentiment.

Editorial friction

The corporate view of media that came clear in the meetings with employees on Friday is likely to cause friction. First and foremost, Armstrong emphasized brand over journalism, with the critical factor for AOL sites to drive unique visitors, which, in turn, is supposed to improve revenue, even as some think that Huffington has tried to distance herself from metric-driven content.

That is an about face from Armstrong’s previously stated interest in building a solid journalistic organization:

In 2009, Armstrong was busy hiring writers and editors with experience.
In February 2010, the company began to hire brand-name journalists.
In June 2010, AOL wanted to be tops in creating top content and planned to hire hundreds.

By the end of 2010, the company had planned to spend upwards of $50 million on local content. Last Friday, at least 200 people in editorial were shown the door.

According to one source, some that lost their jobs had to sit through a call and hear management talk about hiring between 200 and 300 new journalists. Ouch. Really, were they all that bad? If so, why did it take this to adjust the staff rather than doing it in a more timely and less dramatic fashion? If not, why hasn’t the company adjusted their assignments?

Huffington has talked of pairing experienced journalists with those just out of college. At the top, at least, there is emphasis on journalists with name recognition. For example, former CNN anchor Willow Bay, who joined HuffPo in 2007, is one of two department editors for local content. Howard Fineman heads politics. But it’s unclear how deep the experience will be at AOL. One senior news editor is Whitney Snyder, who graduated from Brown in 2008 and, according to his LinkedIn profile, began what seems to have been his first and only job with HuffPo just under 18 months ago. (Hopefully his editing work is more interesting than his personal web site.)

Could it be that AOL decided to drop people with experience and hire young reporters who would command far less in compensation, hoping that the juice of the veterans rubs off?

Talk of hiring talent and of content being the “next phase” of the Internet sounds eerily like what Armstrong had previously said would be AOL’s direction. But, as seems clear from his embracing of HuffPo and readiness to toss so many under the bus, Armstrong is focused on trying to make the company work financially — not journalism, not content, not strategy, and not people he hired.

Branding burns

The business focus has turned into a mania for brands, which means all the websites and services that AOL owns. Normally, strong brands exist because companies have products and services that appeal to consumers and that stand out from competitors.

But AOL seems to have its primary focus on the brand, not what creates the brand. Maybe that’s because in the meetings the company literally stated that it “owns the most valuable audiences for brands.” Because it thinks it owns the audience, all it needs do is roll out brands that appeal to advertisers. (Hint: any time a company thinks that it owns its customers, rather than the other way around, something is seriously wrong.)

All of AOL’s sites and services will have to perform well on AOL’s brand scorecard, which includes such metrics as unique visitor trends, visitor time on site, social referrers, and mobile downloads by platform. Other factors, such as brand awareness and Net Promoter Score (a customer loyalty measure), will require regular marketing studies.

However, none of the brand measurement factors mentioned in the meetings included such media metrics as stories broken, references by other media outlets, or differentiation of content from competitors. Armstrong, a former Internet advertising executive, has focused on metrics that will show the results of what already happened, not what might better anticipate the results or attract an audience in the first place. It’s post facto direction — steering a car by watching the rear view mirror.

Although the company claimed in these meetings to have a clearer and more focused brand portfolio, the extensive list seems unwieldy. There are close to 60 different consumer brands in the U.S. alone, with additional lists for the U.K., Canada, France, and Germany.

A number of the AOL brands that were being “decimated”, according to Jeff Bercovici at Forbes.com, were still listed in the roster for some reason. If they were so strong — that is, if they had what people wanted — why dump so many of the editorial employees responsible for making that happen?

There is some overlap in the brands: AOL Autos and AutoBlog, HuffPost Entertainment and Popeater, AOL Travel and HuffPost Travel, Slashfood and HuffPost Food. That means both potential confusion and wasteful duplication of resources.

Brands include paid services (like AOL Access and Compuserve), business-to-business brands, and some branded partner relationships with the likes of General Motors (GM), Ellen DeGeneres, and Marlo Thomas. (Yes, That Girl — for those who remember that she once starred in a sitcom of that name.)

Although AOL will try to cross promote these properties, it has structured walled verticals that have little to do with each other. The separation will make it difficult to entice people into other areas to increase both page views and the time consumers spend on site. Future consolidation and a reduced number of editorial outlets — sorry, brands — options seem unavoidable, and Armstrong has as much said that there would be future smaller layoffs.

Armstrong certainly has fiduciary responsibilities to the business. Given AOL’s economic position, he doesn’t have much time. But this new approach sounds like a warmed over version of what he tried before. It also sounds uncomfortably similar to AOL’s history of changes in sales and leadership strategy doing more harm than good.

Given the price that AOL paid for HuffPo, Armstrong will expect miracles. And if Huffington can’t deliver, she, too, might find that AOL careers move at Internet speed, without much in the way of longevity.