Leaked Business Plan Illustrate's AOL's Desperation

It hasn't been a good month decade for AOL. A little over a week ago, The New Yorker published a profile of the company's CEO Tim Armstrong in which the author, Ken Auletta, dismissed most of the website's published content as 'piffle.'  Worse, Armstrong admitted that the vast majority of the company's subscribers—some three million out of an estimated 4.1 million total—are needlessly paying an extra $25 for the AOL service. As if that wasn't bad enough, someone inside AOL has since leaked a copy of the company's business plan for Q1 2011; it's not the sort of document that's going to reassure investors.

The image above lays out the company's goals through the end of the first quarter. "Ambitious" is an understatement; AOL intends to increase monthly story production by 26 percent, create nearly 7x as much traffic through large-scale content generation and boost its use of video in news stories by 17.5x (from four percent to 70 percent). All of this is to be accomplished while increasing the median page views per article from 1,512 to 7,000, increasing gross margin from 35 percent to 50 percent, and optimizing 95 percent of all stories with SEO. Other goals for the same time period include shutting down 100 servers and trimming the cost-per-article from $99 to $84.

The rest of the document—some 58 pages in total—is largely concerned with the specific content management features, SEO optimizations, and the appropriate guidelines for story approval/rejection. The slide below sums up AOL's chief concerns.

Note that actual story quality doesn't appear until the bottom of the chart, whereas SEO optimizations and page views are top criteria. This isn't an accident—content quality is only mentioned occasionally and is never presented as a goal in and of itself. AOL then offers an example of what it identifies as "low cost stories at volume/scale to link." The story in question is a pet-related piece on Benadryl For Dogs; AOL bubble windows note that the copy has been written by a "single vetted creator," is part of a series, is original reporting from a credible, named source, and includes SEO optimized text. Total price?  $15.

If this story is even moderately indicative of what AOL wants for its bulk content model, the company's strategy may be doomed from the start. There's nothing inherently wrong with the content or the author's treatment of it, but Benadryl for Dogs is, by the company's own admission, standard Benadryl. Since standard Benadryl is already widely recommended as a first-line measure for allergenic reactions in dogs, there's precious little new news here. As a general bit of fluff news, it's fine. As a piece of work that's supposed to improve pageviews from an average of 1,512 to 7,000, or establish Pawsnation.com as a go-to website for pet-related information, it's not enough. (We say this with no intent to insult the author—it's the positioning of the piece that's at fault, not her treatment of the topic)

AOL is apparently attempting to completely overhaul its organization, production flow, cost structure, and resource utilization simultaneously within a three month window. The company's business plan shows scant concern for the quality of its news writing or the need to satisfy its readers—what matters, we're told, is SEO optimizations and reducing cost-per-article. The managers of AOL's various communities are now expected to have eight or more "Big Idea" packages with an estimated value of $1 million on hand and ready for sale at all times, and there's that crucial video streaming—70 percent of all stories need to have video by March 31. The only thing missing is a discussion of whether or not readers actually want that much video streaming.

Taken as a whole, AOL's Master Plan looks less like a comprehensive, confident restructuring and a whole lot more like a flailing, drowning man. Even if the business elements make sense, the company's content production model doesn't.