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AOL was created in 1985 and its core business was to sell software for Commodore computers. It later switched to email services forwarded with the slogan “You’ve got mail” and introduced America to the wild wide web. AOL went ahead to take over Time Warner which was a media company. The AOL Time Warner merger was not a very successful one since it led to a massive loss in revenue for its investors eventually leading to a split between the two firms. Currently, AOL is trying to make a comeback from years of bad business, decisions and leadership through their new CEO Tim Armstrong. The new CEO who worked for GOOGLE has taken this opportunity to revamp AOL and bring it back to its former glory as a giant in the internet business arena. He is a first time CEO but has enough experience from past work and has more time to learn and create new knowledge in this field.
The company is facing a myriad of problems in this renewed plan towards gaining market stability and need to improve on investor trust. One of the major problems it’s facing is competition from the other major players in internet business. Among these are the Giants Google and Yahoo who have grown to take the largest market share in-terms of advertising and other services that they offer. The second problem is leadership instability which has consequently led to major layoffs. AOL has been going through major business turbulence that has seen its reduced efficiency particularly in market research. They have been in the dark about major market changes for quite a while that they don’t really know which line to pursue between selling web access and selling advertisement. The third and probably the most major problem is the need for AOL to win back investor trust. Since the merger between AOL and Time Warner, the investors have experienced major losses to the tune of hundreds of billions of dollars in share value.
The challenge posed by the competition has been downplayed by AOL. AOL asserts that it still has 100 million monthly viewers and it has 80 websites all producing content about a variety of topics. The new CEO states that AOL still has enough leverage to get blue-chip companies to buy advertising with a guarantee of reaching the array of viewers across the AOL websites. AOL believes that content is a strategy that will help in crushing the competition although this was already tried and it failed.
AOL is looking to appoint a marketing officer to advice on market research. This will help determine the likelihood of AOL to cash in on advertisement. They need to understand both the advertisers and the viewers they need to reach. This arrangement may ultimately lead AOL to improve on its advert sales.
The new CEO doesn’t mind increasing the presence of the AOL brand name in the internet. He is willing to add AOL to all the family sites although doing this might have some negative outcomes. The whole point is to be able to raise enough revenue to maintain their position in the Standard & Poor’s to attract investors.
AOL needs to adapt better strategies to counter the ones put up by their competition such as putting up new content which may age out companies such as Yahoo who use other company’s contents.
AOL needs to apply what it learns from the market research particularly with regards to its users. The users need to know what its new line of business is.
For the investors AOL has no other option but to turn in profits and improve on its business strategies to gain back investor confidence.
Tim Armstrong has the necessary experience and a strong network of experts who can turn AOL around and ensure it attains the success that it enjoyed when it started.
Arango, Tim. “How the AOL-Time Warner Merger Went So Wrong.” Media and Advertising. The New York Times., 10 January.2010. Web. 12 March 2012.
Auletta, Ken. ‘YOU’VE GOT NEWS.” Annals of Communications. The New Yorker., 24 January. 2011. Web.12 March 2012.
Lowry, Tom. “Can Tim Armstrong Save AOL?” Bloomberg Businessweek., 3 December.2009. Web. 12 March 2012.