AOL Hopes to Increase Profits by Replacing Live Ad Sales Reps with Automated System
|One of the original media giants, AOL, laid off approximately 150 employees on Friday, amounting to about 3% of its staff. Though the corporate office, legal department and human resources department were hit in the layoffs, the bulk of the employees who lost their jobs were in the sales department.
According to a source who spoke to USA Today, the reason for these layoffs is largely a result of AOL growing its programmatic ad sales.
Programmatic ad sales are designed to streamline costs by handling large-scale ad sales through sophisticated computer algorithms. AOL says that its programmatic ad revenue increased from 12% of non-search ad sales in the third quarter of 2013 to an impressive 37%. Experts believe the growth will be even bigger when AOL announces the financial results for its fourth quarter on Feb. 11.
Automated selling cuts out the cost of employing a sales rep, which is becoming a necessity at companies like Yahoo! and AOL. Display ads which appear on their branded websites have proven difficult to make a profit on, especially when the cost of labor is involved. Display ad revenue from branded sites under AOL only grew 1% last quarter.
Profits from sales reps aren’t so hard to come by in the auto industry this year. Plunging gas prices and a stronger economy have resulted in a booming job market for reps who want to sell cars. According to CNN, last year was the strongest year for car sales since 2006, in spite of numerous recalls. But for companies like AOL, who sell a less tangible (and desirable) product, profits can be hard to pin down.
“Good sales reps are always in high demand,” Matthew Cook, founder of SalesForce Search. “While some may switch to automotive sales given the demand, good reps from AOL should have no problem finding sales jobs in a similar industry.”
The rest of the AOL cuts were a result of planned consolidation of media sites under the AOL banner. Tech website Engadget will absorb Gaming site Joystiq and Apple fan blog TUAW, and AOL Autos will be combined with AOL’s Autoblog site.
The consolidations are designed to help AOL focus on growing its bigger brands, like TechCrunch, The Huffington Post and Engadget.