AOL May Finally Be Recovering, with Display Ad Revenue Growth in Q2

AOL has posted its financial results for the second quarter and they're encouraging, above market expectations and with losses decreasing and ad sales increasing.

AOL made $542 million in Q2 2011, an eight percent drop from the same period in 2010, when it made $592 million.

However, the company only had $11.8 million in net losses in the second quarter, compared to more than $1 billion (with a 'b') in 2010.

Ad revenue saw a rise, for the first time since AOL embarked on its revamp, as an independent company, with Tim Armstrong at the helm.

Dial-up revenue, unsurprisingly, dropped 23 percent from a year ago and its other revenues also saw a drop of 20 percent.

"AOL's return to global advertising growth for the first time since 2008 reflects the hard work of our team and another meaningful step forward in the comeback of the AOL brand," Tim Armstrong, Chairman and CEO of AOL, said.

"AOL is singularly focused on becoming the next great media company for the digital age and we have positioned the Company's best people, technology and assets in front of some of the largest opportunities on the internet," he added.

Ad revenue grew by five percent, after a flat Q1, spurred by display ad sales in particular, which grew by 14 percent. Revenue from its third-party ad network also grew by 29 percent.

In total, AOL made $137 million from display ads, up 14 percent from the last year, but search ad revenue dwindled by 21 percent, to $87.8 million.

Subscription revenue, from its dying dial-up business, dropped by 23 percent, to $201 million. This revenue stream will continue to drop and AOL has to replace it with revenue from its ad network.

This is the first quarter when ad revenue grew, signaling that Armstrong's strategy may finally be starting to pay off. It is probably too early to call it a success though, AOL will have to have at least a few more quarters like this for things to be clearly on the right track.