America Online 2011 Annual Report Download - page 11

Table of Contents
opportunities to purchase specific placements of advertising directly on AOL Properties (i.e., in particular locations and on specific dates). In addition, we
offer advertisers the opportunity to bid on unreserved advertising inventory on AOL Properties utilizing our proprietary scheduling, optimization and delivery
technology. Finally, advertising inventory on AOL Properties not sold directly to advertisers, as described above, may be included for sale to advertisers with
inventory purchased from third-party publishers in the Third Party Network.
For the years ended December 31, 2011, 2010 and 2009, our advertising revenues on AOL Properties were $930.5 million, $940.4 million and $1,207.3
million, respectively.
Display Advertising Revenues
Display advertising revenues are generated through the display of graphical advertisements as well as performance-based advertising. Agreements for
advertising on AOL Properties typically take the following forms:
• impression-based contracts in which we provide "impressions" (an "impression" is delivered when an advertisement appears in web pages viewed
by users) 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.
We utilize our own proprietary "ad serving technology" (i.e., technology that places advertisements on websites and digital devices) as the primary
vehicle for placements of advertisements on AOL Properties through our subsidiary, ADTECH GmbH ("ADTECH", formerly ADTECH AG). We also
license this ad serving technology to third parties.
Search and Contextual Advertising
Search and contextual advertising revenues are generated when a consumer clicks on a text-based ad on their screen. These text-based ads are either
generated from a consumer-initiated search query or generated based on the content of the webpage the consumer is viewing. Google is, except in certain
limited circumstances, the exclusive web search provider for AOL Properties, based on our agreement that runs through December 31, 2015. In connection
with these search services, Google provides us with a share of the revenue generated through paid text-based search advertising and contextual advertising on
AOL Properties. For the year ended December 31, 2011, advertising revenues associated with the Google relationship (substantially all of which were search
and contextual revenues generated on AOL Properties) were $335.3 million. In addition, we sell search-based keyword advertising directly to advertisers on
AOL Properties through the use of a white-labeled, modified version of Google's advertising platform, for which we provide a share of the revenue generated
through such sales to Google. As part of our relationship with Google, we have expanded the alliance to include the provision of mobile search and mobile
search advertising services to AOL. AOL and Google also have a video partnership that features AOL's video content on YouTube. See "Item 1A—Risk
Factors—Risks Relating to Our Business—We are dependent on a third-party search provider".
Third Party Network Advertising Revenues
We also generate advertising revenues through the sale of advertising on third party websites. Our advertising offerings on the Third Party Network
consist primarily of the sale of display advertising and also include search and contextual advertising. Advertising arrangements for the sale of Third Party
Network inventory typically take the form of impression-based contracts or performance-based contracts. In order to
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