America Online 2009 Annual Report Download - page 48

Table of Contents
The following table presents our revenues, by revenue type, as a percentage of total revenues for the periods presented:
Years Ended December 31,
2009 2008 2007
Revenues:
Advertising 54% 50% 43%
Subscription 43 46 54
Other 3 4 3
Total revenues 100% 100% 100%
The strengthening of the U.S. dollar relative to major foreign currencies to which we are exposed negatively affected our revenues by approximately
$55 million for the year ended December 31, 2009, as compared to the year ended December 31, 2008. However, due to an offsetting positive impact on
expenses, the impact of exchange rate differences on operating income and net income in comparing these periods was not material.
ADVERTISING REVENUES
Advertising revenues are generated on AOL Properties through display advertising and search and contextual advertising. Display advertising revenue
is generated by the display of graphical advertisements and other performance-based advertising. Search and contextual advertising revenue is generated when
a user clicks on or views a text-based advertisement on the user's screen. These text-based advertisements are either generated from a user-initiated search
query or generated based on the content of the webpage the user is viewing. Agreements for advertising on AOL Properties typically take the form of
impression-based contracts in which we provide impressions in exchange for a fixed fee (generally stated as cost-per-thousand impressions), time-based
contracts in which we provide a minimum number of impressions over a specified time period for a fixed fee or performance-based contracts in which
performance is measured in terms of either "click-throughs" when a user clicks on a company's advertisement or other user actions such as product/customer
registrations, survey participation, sales leads or product purchases. In addition, agreements with advertisers can include other advertising-related elements
such as content sponsorships, exclusivities or advertising effectiveness research.
In addition to advertising revenues generated on AOL Properties, we also generate revenues from our advertising offerings on the Third Party Network.
To generate revenues on the Third Party Network, we purchase advertising inventory from publishers (both large and small) in the Third Party Network using
proprietary optimization, targeting and delivery technology to best match advertisers with available advertising inventory. Advertising arrangements for the
sale of Third Party Network inventory typically take the form of impression-based contracts or performance-based contracts.
Advertising revenues on AOL Properties and the Third Party Network for the years ended December 31, 2009, 2008 and 2007 are as follows (in
millions):
Years Ended December 31,
2009 2008
% Change
from 2008
to 2009 2007
% Change
from 2007
to 2008
AOL Properties:
Display $ 603.9 $ 729.2 (17)% $ 896.2 (19)%
Search and Contextual 609.8 721.2 (15)% 656.9 10%
Total AOL Properties 1,213.7 1,450.4 (16)% 1,553.1 (7)%
Third Party Network 534.6 646.0 (17)% 677.5 (5)%
Total advertising revenues $ 1,748.3 $ 2,096.4 (17)% $ 2,230.6 (6)%
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