America Online 2014 Annual Report Download - page 57

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AOL INC.
PART II—ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Advertising revenues are also generated on Third Party Properties through the sale of advertising inventory
by publishers on the Third Party Properties using proprietary optimization, targeting and delivery technology to
best match advertisers with available advertising inventory. 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 addition to advertising revenues generated on AOL Properties and Third Party Properties, we also earn
other revenues by licensing our proprietary ad serving technology to third parties, primarily through ADTECH,
from licensing revenues from third-party customers through MapQuest’s business-to-business services and
online travel services, from ticket sales related to technology events hosted by TechCrunch 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. Subsequent to the acquisition of Convertro, other revenues also includes revenues
from licensing Convertro’s attribution modeling technology.
Advertising and other revenues for the years ended December 31, 2014, 2013 and 2012 are as follows (in
millions):
Years Ended December 31,
2014 2013
Change
from 2013
to 2014
% Change
from 2013
to 2014 2012
Change
from 2012
to 2013
% Change
from 2012
to 2013
AOL Properties Display .... $ 593.1 $ 610.2 $ (17.1) (3)% $ 575.4 $ 34.8 6%
AOL Properties Search ..... 402.6 388.5 14.1 4% 371.5 17.0 5%
Third Party Properties ...... 856.2 614.7 241.5 39% 471.6 143.1 30%
Other ................... 68.8 56.4 12.4 22% 67.9 (11.5) (17)%
Total advertising and other
revenues ............... $ 1,920.7 $ 1,669.8 $ 250.9 15% $ 1,486.4 $ 183.4 12%
2014 vs. 2013
Third Party Properties revenue increased due to growth in the sale of premium formats, including video,
across our programmatic platform and the inclusion of revenue from Adap.tv for a full year as compared to
approximately four months in 2013 (Third Party Properties revenue grew approximately 20% for the year ended
December 31, 2014 excluding Adap.tv). The growth in AOL Properties search revenue was driven by an increase
in queries from search marketing-related efforts. Revenue growth associated with search marketing-related
efforts came with $63.6 million of increased TAC. AOL Properties display revenue decreased due to a decline of
$41.4 million related to shutdown or disposed brands, including Patch, and declines in desktop impressions,
partially offset by increased pricing on AOL Properties.
Other revenue increased primarily due to the increase in platform access fees of $10.5 million related to
Adap.tv and the increase in revenues of $5.1 million from licensing Convertro’s attribution modeling technology,
partially offset by a decrease in revenues from our mobile messaging services of $2.8 million.
2013 vs. 2012
Third Party Properties revenue increased primarily due to growth in the sale of premium formats across our
programmatic platform and by the inclusion of revenue from Adap.tv. Third Party Properties revenue includes
41