More ad troubles for AOL, but are they self-inflicted?

Ad revenues at AOL are no longer 'growing like a weed,' a Time Warner exec admitted at a conference this week. The CFO didn't mention, though, that AOL had just intentionally canceled some of its contracts with advertisers.

Advertisers are now starting to pull back from AOL's Platform-A ad platform, acknowledged Time Warner CFO John Martin, speaking this week at Merrill Lynch's investors conference.

Although AOL's ad revenues had been growing "like a weed," spending by advertisers has recently slowed down, according to Martin. "[This] gives us pause in terms of our confidence to ramp advertising in the back half of this year," he told the investors.

The CFO also warned that, after projecting in August that its ad revenues would rise through the end of 2008, AOL might now miss its revenue targets.

Also at this week's Merrill Lynch conference, however, News Corp. President and COO Peter Chernin said that ad revenues for that company's MySpace property are doing better than expected, even though some financial analysts were worried earlier this year that MySpace might miss its revenue targets as well.

So it's likely that, beyond a tough economy, internal factors are playing a role in AOL's ad troubles, too -- especially when you consider that AOL canceled its publishing contracts as of August with customers inherited from its Tacoda buyout, asking them to adopt its newer Platform-A ad platform as an alternative.

Also this week, AOL announced plans to start "opening up" its walled garden on AOL.com, starting with giving users the ability to access e-mail accounts from Yahoo, Gmail, and Hotmail in addition to AOL.

Yet AOL has been meanwhile struggling with integrating the various acquired entities -- Advertising.com, behavioral advertising network Tacoda, two other ad networks for text ads, and Third Screen Media for mobile ads. Those entities were supposed to have been brought together under the Platform-A umbrella.

Last March, during the Bear Sterns media conference, Time Warner CEO Jeff Bewkes told investors that he didn't expect to see much improvement all that soon in AOL's ad sales, even then. "We do think [there will be] one more quarter of really flat advertising," he predicted.

As a solution, Bewkes said, AOL planned to adopt a long-range position of building "advantage over competition." One of the "key objectives" in doing so, he said, was to take better advantage of AOL's Advertising.com, a property which sells ad inventory through a large network of Web sites.

At that time, Jeff Viebranz, who arrived at AOL through its Tacoda buyout, had just been fired as the head of Platform-A, in the midst of a larger staff shake-up. Viebranz was replaced in that role by Linda Clarizio, a Harvard Law School grad who was previously president of Advertising.com.

Since then, AOL has reportedly started using Tacoda's technology -- which targets ads based on consumers' online behaviors -- within Platform-A.

But this summer, the company sent out a letter canceling all publishing contracts for Tacoda as of August, asking advertisers to switch to Advertising.com/Platform-A instead.

Evidently, some of these customers weren't willing to make the change. Although more costly for advertisers, Tacoda was known for delivering much better returns on the money spent.

Meanwhile, Clarizio has been quoted elsewhere as saying that, aside from Tacoda's engineering department, many other members of the Tacoda team have now left AOL, some voluntarily and others not.