John Battelle's Searchblog

John –

Your audio post on AOL’s advertising revenue growth being hit by changes to its search product is partially right. As the executive in charge of search at AOL I wanted to give you and your readers a little more context – beyond what Time Warner discussed on its Q2 earnings call related to this issue.

Earlier this year, the company noticed that in search our monthly unique visitors (UVs) were declining and our queries per unique visitor (Q/UV) were less than half of the industry leader. While our research showed that we had industry leading RPMs, our search user recirculation back into the AOL network had dropped significantly. In short, AOL was running search to maximize revenue over the short-term, but we were losing UVs and delivering a consumer experience that was not driving query refinement (Q/UV). We cluttered the page with rich media in a way that caused the load time to slow considerably – leading to fewer successful searches for our users. The whole experience led to user behavior that was fragmented which negatively effected query refinement/reformulation and network recirculation. While there was some short-term gain to be had in search revenues, we were running our search audience off by not heeding the story the data was telling us.

Google is our partner, the search industry leader, and powers our search product. We needed to make a change to: stop our UV decline, increase our queries per UV, and increase the network recirculation of our valued users. So, we made a decision to change our product to look and respond more like the top three industry leading search engines in terms of: placement of sponsored links, recirculation links, organic links, usage of rich media, etc. So to some degree – to use your words – we were "mimicking" Google to determine the effects these changes would have on the previously mentioned critical success metrics. We will continue to make slight modifications and enhancements to the current design to further improve these metrics. As we do so, the design will again begin to slightly deviate from the top search engines as we tune our product to our AOL specific user base and their needs / behaviors.

Whenever you change a user experience there is an impact in terms of how consumers experience the product. Users routinely require a little time to become accustomed to the redesigned pages. This impact also extends to advertisers – who naturally want to see how the new product performs. That did have a short-term revenue impact in Q2. But since the change has settled in with users, the number of queries per unique is up, our recirculation numbers are up and our pages are loading 25% faster. Importantly, we seemed to have stopped the loss of UVs.

Certainly we had a choice about whether or not to make this change to search – as well as our other programming changes that also had a short-term impact that affected ad revenue growth in the quarter. We could have done nothing – but long-term that would not have been sustainable for the business because, over time, we would have driven our consumers away and ultimately we would have forfeited our search business.

At the end of the day it is about the size of your audience. We heeded the data, made some changes that in the short-term caused us a little pain – but we are in this business for the long haul and I am confident we are back on track in search and across the business.

Wishing you a speedy recovery.

Best,

Ted Cahall
EVP, Platforms and Technologies
AOL

Thanks for taking the time to respond, Ted!