AOL and MySpace reflect hazards of doing business on internet

Abu Dhabi: If you're looking for two companies that exemplify the hazards of doing business on the internet, you don't have to look farther than AOL and MySpace. Once dominant online companies, both are now fighting to bring in advertising revenue.

The companies' current chairmen and CEOs, Tim Armstrong and Jon Miller, took the stage together yesterday at the Abu Dhabi Media Summit along with Kai-Fu Lee, who recently left Google China to found Innovation Works, to talk about the future of online media. Their message: technology and media have still not come together.

Their goal, they say, is to build up brand advertising online as opposed to search advertising, which is dominated by Google. Armstrong acknowledged that brand advertising needs to go through the same technology advances as search engines once did.

"If you talk to customers about what they need for advertising, what they need is a brand experience that helps them keep their brand differential."

Special attention

Portals like AOL also have to spend special attention to brands that have lost their traditional advertising mediums and are not having much success with search advertising. One example Armstrong used was paper towels.

According to Miller, who oversees News Corps digital media service and MySpace, search advertising is three to four times the size of brand advertising. The question, Miller said, is what business models will follow? Miller thinks it will be micro payments, dual revenue streams, which means revenue from both subscriptions and advertising.

"People pay with their money or their time," he said. Lee disagreed, saying revenue is more about targeted advertising.

"It isn't the number of revenuesstreams, but whether the model leverages the growth on the internet."

He said advertising should be measureable, since advertisers want to know who their customers are and whether their ads are effective. He also pointed out that ad-supported content would not always work.

"When the audience has the option of choosing what they want to see, their tolerance for commercials goes down," he said.