America Online 2009 Annual Report Download - page 13

Table of Contents
advertising revenues by providing paid-search advertising and contextual advertising on AOL Properties, either through the continuation of our relationship
with Google or an agreement with another provider. See "Item 1A—Risk Factors—Risks Relating to Our Business—We are dependent on a third-party search
provider".
For the years ended December 31, 2009, 2008 and 2007, our advertising revenues on AOL Properties were $1,213.7 million, $1,450.4 million and
$1,553.1 million, respectively.
SUBSCRIPTION REVENUES
We generate subscription revenues through our subscription access service. As of January 2010, our primary AOL-brand price plans were $25.90 and
$11.99 per month. We also offer consumers, among other things, enhanced online safety and security features and technical support for a monthly
subscription fee. As noted above, our access service subscriber base has declined and is expected to continue to decline. This has resulted in year-over-year
declines in our subscription revenues. The number of domestic AOL-brand access subscribers was 5.0 million, 6.9 million and 9.3 million at December 31,
2009, 2008 and 2007, respectively. For the years ended December 31, 2009, 2008 and 2007, our subscription revenues were $1,388.8 million, $1,929.3
million and $2,787.9 million, respectively.
Although our subscription revenues have declined and are expected to continue to decline, we believe that our subscription access service will continue
to provide us with an important source of revenue and cash flow in the near term. The revenue and cash flow generated from our subscription access service
will help us to pursue our strategic initiatives.
Third Party Network
We also generate advertising revenues through the sale of advertising on the Third Party Network. In order to effectively connect advertisers with
online advertising inventory, we purchase advertising inventory from publishers and utilize proprietary optimization, targeting and delivery technology to best
match advertisers with available advertising inventory. We also offer search engine campaign management and lead generation affiliate products. However, in
the fourth quarter of 2009, we began proactively de-emphasizing the search engine campaign management and lead generation affiliate products on the Third
Party Network in order to focus and strengthen our efforts in display advertising solutions.
The Third Party Network includes a display advertising interface that gives advertisers the ability to target and control the delivery of their
advertisements and provides advertisers and agencies with relevant display analytics and measurement tools. We intend to utilize self-service systems and
tools in order to expand our relationships with advertisers. For our publishers, inclusion in the Third Party Network offers a comprehensive set of tools and
technologies to manage and maximize their return.
We utilize a proprietary scheduling, optimization and delivery technology, called AdLearn, which employs a set of complex mathematical algorithms
that seek to optimize advertisement placements across the Third Party Network and the available inventory on AOL Properties. This optimization is based on
expected user response, which is derived from previous user response plus factors such as user segmentation, creative performance and site performance.
AdLearn allows performance to be analyzed quickly and advertisement placement to be frequently optimized based on specific objectives, including click-
through rate, conversion rate, sales volume and other metrics.
Advertising arrangements for the sale of Third Party Network inventory typically take the form of impression-based contracts or performance-based
contracts. For the years ended December 31, 2009, 2008 and 2007, our advertising revenues on the Third Party Network were $534.6 million, $646.0 million
and $677.5 million, respectively.
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