HuffPo Deal Dovetails With AOL Strategy

When AOL bought the Huffington Post, I typed notes and fielded a call from reporter @rfaughnder and never got to writing my own thoughts. Yesterday,. a good part of the discussion in a Social Media Week panel on valuation was about how AOL overpaid, on a purely financial basis (though we all know they were really buying whatever "ooomph" Arianna & Co. give it, not just a multiple of cash flow or revenues; think of what it's worth in PR terms if under Huffington's name it says "AOL" every time she's on ABC, NBC, CBS and all the rest. Not to mention her acumen and her staff's expertise.)

On the panel, Mark Patricof of MESA Global media advisors (and son of media-tech investor Alan Patricof) said HuffPo likely would have found it hard to reach $100 million (which I took to mean yearly revenues), the amount it would have taken to have a very successful IPO. So for them, it was a good deal.

Here's my bullet point list.

• It shows AOL is now a content company -- especially, for now, written content -- not ISP or services
• AOL gets HuffPo editorial acumen -- ability to aggregate as well as create
• HuffPo gets resources (tech, business) and cash
• But don’t ignore HuffPo technical acumen - content management and SEO,
• Good value on financial basis? (For HuffPo, certainly. Good valuation, keep brand, keep leadership.)
• Is this a good strategic fit?
• Can cultures work together?
• Arianna's politics an issue? (AOL won’t want to tick off conservatives.()
• HuffPo was looking to do more local. Patch helps?
• In line w/ AOL's plans and leaked document (referred to in piece linked below).
• Another step in the new world of journalism and content creation.

And here are excerpts from Ryan Faughnder's piece in the Annenberg publication Neon Tommy: Huffington Post Deal Dovetails With AOL's Strategy

The changes are strategically in line with what AOL is trying to do already,” said Dorian Benkoil, senior vice president and editorial director of Teeming Media, a consultancy company for digital media organizations.

AOL will try to tap into The Huffington Post’s technical mastery of search engine optimization and content management, he said.

“They have created a successful modern media company based on aggregation, optimization and creation, as well as a very important social layer and the ability to link and monetize those links. I think that model is repeatable across the board,” he said.

According to a copy of AOL’s master plan, acquired by Business Insider, Armstrong wants AOL to “increase its story output from 33,000 to 55,000 per month, page-views from 1,500 to 7,000 and web optimization of stories to 95 percent. Stories are heavily vetted for their potential to draw advertising.

The Huffington Post will clearly benefit from the deal, Benkoil said.

“They get to continue to do what they do and preserve what they have while using the resources of AOL,” he said."

AOL's New 'Newspaper' (or Portal?) Strategy #iabiw #iwny

@PaidContent is reporting that AOL, under new exec (and former Googler) David Eun, is refining the company's content strategy into "Super Network" categories like news, life, health and so on. Paid Content likens it to a "newspaper" strategy, but I can't help but think of a portal. After all, isn't that how the portals were conceived and designed -- as big swathes of content against which relevant advertising could be placed?

One important difference here being, of course, that AOL is producing much much more of its content and not primarily aggregating others'. That's a point that CEO Tim Armstrong made (even as the Paid Content piece was being sent around) at the IAB's Innovation Days conference (#iabiw) at Intennet Week (#iwny) in NY. Armstrong said that on AOL (sorry guess it's Aol now ;) ), "youi'll see us more and more doing the originating of the journalism. There's a lot of original journalism" already he said, citing religion, health and other categories. Armstrong a number of times mentioned high-profile names in journalism that AOL had snared. (Armstrong said this to Slate's Jacob Weisberg, a high-profile journalist himself.) UPDATE: Dora Chomiak, friend and sometimes colleague also at the conf. points out that one reason AOL may lag in search optimization is because of their history as walled garden. Though, they have been in the audience attraction and aggregation biz for a lot of years now.)

Armstrong did say AOL may not "get there" completely in having all its content be original at the absolute highest level, but said "You could drive a Mach Truck through the opportunity right now in terms of getting back to the basics in journalism," which is being cut back so many places.

He also said AOL still had work to do in SEO, surprising (to me) for a company that had bet so much of its former fortunes on aggregating content and attracting audiences that way. He said AOL had to find consumers wherever they were "open" to receive it, using a football passing analogy. He said, too , it's incumbent on those creating and distributing content to reach the consumers of it on whatever platform they're using, and continue to use going forward -- whether the Web, mobile, iPad or anything else. (True that, if obvious and said many times before).

And pardon the tags in the head and lead. Twitter's not cooperating today, so want to try to get this to Twitter via the blog.