Sunday, February 06, 2011

AOL acquires The Huffington Post: Buying its way to relevance?

About an hour ago, AOL announced that it's acquiring the Huffington Post for $315 Million. According to Advertising Age, $300 million of the $315 million purchase price will be in paid in cash. TechCrunch has published the email sent by AOL CEO Tim Armstrong announcing the deal to his employees. All of AOL's media properties, including Patch, Seed, Engadget (and the other Weblogs, Inc. properties that AOL acquired in 2005) and the recently-acquired TechCrunch, will be folded into a new Huffington Post Media Group, to be run by Arianna Huffington.

Last week, Business Insider published a very detailed presentation on AOL's media operations--essentially, the rule book for how the company's media properties are to be run. Whether or not Arianna Huffington is going to be made to adopt the rules, which leave virtually no room for individual interpretation, hasn't been addressed. It seems very unlikely that she's going to be willing to be straitjacketed into an operating plan that effectively dictates what every member of her team will do, every hour of the day.

It's clear that internally-developed projects such as Patch and Seed aren't enough to drive the traffic that AOL is looking for. Tim Armstrong is willing to buy content and traffic, even at high prices. However, it's not clear as to how all these different properties can be organized coherently. The operation plan published by Business Insider emphasized increasing advertising CPMs via video and increasing traffic through search engine optimization while continually decreasing the cost of acquiring or creating content. On its surface, the plan was to build AOL into a tightly cross-linked content farm. How that plan will fare now that the HuffPo is essentially in control of the entire operation remains to be seen.
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