Tim Armstrong

Lies My CEO Told Me.

Lies my CEO Told MeWhen the announcement came down last week that Aol was eliminating 150 sales jobs and consolidating several brands I immediately got a half-dozen emails and calls asking the same question: “Did programmatic technology eliminate these jobs?” The answer Wall Street would like to hear is “yes.” The real answer, I believe, is “no.” As the old backwoods philosophy goes, “Just because your cat has kittens in the oven don’t make ‘em biscuits.” (Translation: Things are not as simple as they seem.)

I believe Aol confronted some core business issues – redundancy of brands, participation in spaces where they couldn’t lead, creeping bureaucracy – by taking swift and decisive action. Investors should reward them for that alone. But if Wall Street wants to infer that a grand automation plan made it all happen… Tim Armstrong might just be saying “Well that was a freebie.”

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Just as there are two kinds of history that get taught in our country – high school textbook history and real, academically reviewed history – there are two levels of ‘truth’ in our world: the truth that the CEO is forced to tell the investors and markets and the truth about how the business really runs. Your CEO isn’t a liar and he or she doesn’t mean any harm: it’s just a case of dynamic messaging based on audience. Here are a few of the little white lies they have to tell from time to time.

“The technology will sell itself.” Maybe if it was 25 years ago and a small handful of tech giants roamed the earth and ate all the food. But even the best technological leap will have a hell of a time even being noticed in the cacophony of today’s crowded marketplace.

“Media sales is a transitional business for us.” Saying ‘we’re just going to sell ads for a while’ is like saying ‘we’re just sending a few advisors to Vietnam.’ You either commit to the core of your technology business or commit to being a player in the media sales game. Doing neither means half-assing them both.

“Programmatic will eliminate the need for a sales team.” If you “set it and forget it” you will get the results you deserve. And if you have no more imagination than this about how great sellers could create value and margin for your business, then programmatic will likely eliminate the need for the current CEO. Programmatic is real, it’s vitally important, and it’s part of a balanced revenue diet. But it won’t run itself and it won’t create the kind of margin that your high growth business needs.

“We’ll get there in 12-18 Months.” It’s always going to be harder, take longer and require more money and resources than the business plan assumes. Don’t buy into the projection; buy into the quality of the leadership.

The next time you hear your CEO speaking in code like this to the markets, fear not: he probably knows the real truth and will run your business accordingly. If not, you may want to forward him this post.

We’ve just added Terry Kawaja, creator of the LUMAscape, to our discussion of the digital video landscape at Seller Forum on March 12th.  If you lead a team that sells media, you need to be there.  Request your invitation today.

AOL’s Moment: A Tale of Two Outcomes

Since the first news alert hit my in-box on Monday morning I’ve been trying to decide how I feel about the acquisition of Huffington Post by AOL.   I’ve come down squarely on undecided:  there are at least two very clear, very different outcomes possible.

One justification for the deal (which reportedly cost AOL nearly half of its cash) is that it will create a whole lot more page views that AOL’s sales team can then monetize.  As I said in this space back in June, simply growing page views is a flawed strategy.  Even though there’s been much reporting of AOL’s audience attrition with the evacuation of dial up customers, I don’t believe that scale is what truly matters here.  If AOL simply applies the same advertising-based monetization strategies to a new slice of inventory, then this ends up being a $350 million search optimization deal.

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On the other hand, Huffington Post is also valued for the strategy and style with which it aggregates content and generates outsized social media impact.  Let’s call this the “Arianna’s got it figured out” scenario.  If Tim Armstrong really hands her the keys — and if she can get the car running — AOL may become a lean, mean content machine, generating the content that the web ends up talking about, forwarding, rating, tweeting.  If you believe “all media will be social” then you like this approach.  In this scenario, AOL actually does “reinvent” journalism for the digital age (or at least begins deploying its replacement).

Tim may have used the first scenario to justify the deal to investors, but the second is the one that will not only save AOL but give it the chance to once again be a leader in marketing.  But nothing in this deal will do any good at all if…..

  • AOL’s vision is limited to “advertising” revenue.  No brand is lying awake because there are too few places to advertise. The future is about spawning marketing services, getting ever closer to brands and businesses.  As it resets its editorial voice, AOL must also rebuild itself as a business platform.
  • The dead-enders end up winning.  Looking back across the history of M&A at AOL, you can’t say this is a company that’s been able to extract value from what it buys.  Is Arianna Huffington the visionary that breaks the cycle?  Or does she get swallowed up in the same black hole of bureaucracy and corporate inertia that’s driven out so many before her?

Let me be clear:  I’m pulling for AOL, for Tim Armstrong, for Arianna Huffington.   I’m applauding Tim and his regime for their willingness to make a big bet.  But now it’s time to burn the ships and leave absolutely no room for retreat.  If this works, its one of the greatest turnarounds ever, spawning perhaps the web’s first truly great content play.  AOL, this is indeed your moment.