by David Kaplan
After making several content buys the past few months, AOL (NYSE: AOL) is approaching the end of the year with an acquisition for the advertising side of its business. Its latest purchase is Pictela, a high-def display ad tool. The announcement of the deal, terms of which weren’t disclosed, was timed for the complete rollout of AOL’s page takeover ad serving system Project Devil. The acquisition follows a string of AOL purchases including StudioNow, 5min Media, TechCrunch and Thing Labs.
One-year-old Pictela will keep its brand and remain a separate entity within AOL Advertising. In addition to complementing Project Devil, the company will be expected to continue working with outside clients.
Over the past few months, AOL, as well as Yahoo (NSDQ: YHOO) and YouTube (NSDQ: GOOG) have signed large deals with advertisers for huge takeover ads as a way to attract premium brand dollars as the display market has recovered mightily. Takeover ads or splash pages come in various formats, but most tend to serve as a way to show premium rich media ads. Pictela has worked with Yahoo and Microsoft (NSDQ: MSFT), so it will be interesting to see whether those relationships will continue. For example, the partnership with Microsoft is only about two months old. Pictela and AOL have been working together since June.
For industry groups like the Online Publishers Associationand the Interactive Advertising Bureau, these larger formats are meant to inspire greater creativity as well as more ad spending. Ultimately, the hope is that the more these larger formats dominate display, it will help turn online into more of a brand medium, as opposed to a direct response one. With DR, banner ads serve as a small, sometimes garish canvas for lower cost pay-per-click spots. Given that a minority of users tend to actually click on an ad, this form of advertising has generally made display look cheap in all senses of the word.
That’s the idea behind Project Devil—which was unveiled in September—and Pictela as well. Starting today, Project Devil will be used more widely throughout AOL and its various properties.
According to a report on the use of this ad format by the major portals, analyst group Macquarie found that takeovers made up 23 percent of daily homepage inventory for Yahoo, which has seen its display revenues rise 17 percent in Q3. Although Project Devil had just been introduced, AOL nevertheless had the highest percentage of takeovers with 36 percent of its ads using that format, something that helped arrest the display declines its had this year. The declines have been attributed to the continued overhaul of AOL’s ad sales team and functions.