AOL Chief Executive Armstrong Targets Mobile-Advertising Sales for Growth

AOL Inc. (AOL) Chief Executive Officer Tim Armstrong said he’s aiming to get at least 10 percent of revenue from mobile advertising in the next year and a half, up from a “tiny” portion now.

“We’re very, very small right now in mobile,” Armstrong, who took the helm in 2009, said in an interview yesterday. “The opportunity is there, and we’ve got to get really organized around it.”

Armstrong needs to bolster earnings in online advertising as AOL’s profitable Internet-access business declines. The New York-based company posted a net loss of $782.5 million last year as it struggled to compete against Google Inc. and Facebook Inc. for users and advertisers. To woo marketers, AOL seeks to offer new ways to target consumers, Armstrong said.

Advertising increased to 60 percent of revenue in the third quarter, compared with 52 percent the previous year. All AOL products and services will eventually have to reach targets in the area of mobile, he said.

AOL rose 0.1 percent to $13.94 at 9:35 a.m. in New York. The shares have declined 41 percent this year before today.

Mobile advertising is likely to be a “heavy M&A” space as companies work to make money on customers that switch to smartphones, Armstrong said. AOL is also seeking to get business from video advertisers, he said.

“Video looks like a faster total revenue opportunity,” he said. “Mobile is a faster opportunity to grow, percentage-wise. We’re doing it ourselves right now, but I wouldn’t rule out that we’re going to be aggressive” in acquiring companies, he said.

Independence Preferred

AOL’s decline in market capitalization this year has made it a candidate for a buyout by a private-equity firm, Ken Sena, an analyst at Evercore Partners Inc. (EVR) in New York, has said.

Armstrong said in yesterday’s interview that it “doesn’t matter” whether AOL remains public or goes private. Continuing to operate as an independent entity is the “first desired course of action,” he said.

“People ask me all the time, ‘What about the competition?’ and ‘How does AOL fit into the competitive environment?’ Armstrong said. ‘‘Sitting in the CEO chair, you have to pay attention to everything that goes on. I do pay attention to everything that goes on. We’re purely focused on execution at this point.’’

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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