America Online 2014 Annual Report Download - page 26

For the years ended December 31, 2014, 2013 and 2012, our advertising revenues on AOL Properties were
$995.7 million, $998.7 million and $946.9 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 promotion 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, product purchases or other revenue sharing
relationships.
Search Advertising Revenues
Search advertising revenues are generated on AOL Properties 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 web page the consumer is viewing. Google is, except in certain limited circumstances, the
exclusive web search and search-based advertising 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 and contextual advertising on AOL Properties. For the year
ended December 31, 2014, advertising revenues associated with the Google relationship were $407.4 million.
Substantially all of these revenues were search revenues generated on AOL Properties, with a significant
majority generated within the Brand Group and to a lesser extent within the Membership Group. See “Item 1A-
Risk Factors-Risks Relating to Our Business-We are dependent on a third-party search provider.”
Third Party Properties Advertising Revenues
Advertising revenues are generated on Third Party Properties through the sale of advertising inventory by
publishers on the Third Party Properties. Our advertising offerings on Third Party Properties consist primarily of
the sale of display advertising and also include search advertising. Advertising arrangements for the sale of Third
Party Properties inventory typically take the form of impression-based contracts or performance-based contracts.
In order to generate advertising revenues on Third Party Properties, we incur higher traffic acquisition costs
(“TAC”) as compared to advertising on AOL Properties.
For the years ended December 31, 2014, 2013 and 2012, our advertising revenues on Third Party Properties
were $856.2 million, $614.7 million and $471.6 million, respectively.
Other Revenues
In addition to advertising revenues, we also generate other revenues, including platform and service
fees. The Brand Group generates licensing revenues from third-party customers through MapQuest’s business-to-
business services and online travel services as well as revenue from ticket sales related to technology events
hosted by TechCrunch. The Brand Group also generates revenue from licensing its content and platforms to third
parties. AOL Platforms generates other revenues by licensing our proprietary ad serving technology to third
parties, primarily through ADTECH, and through fees generated from publishers and advertisers using Adap.tv’s
platform technology and features, as well as services such as ad serving and hosting. AOL Platforms also
generates other revenues from licensing Convertro’s attribution modeling technology.
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