AOL internet advertising revenue declines 27%

AOL's internet advertising revenue fell by 27 per cent in the second quarter of this year, compared to the same period in 2009.

The company believes that its renewed focus on improving the consumer experience across its online offering has contributed to the largest proportion of this decline - equal to about $70 million (£44 million)of the $110 million year-on-year drop in earnings.

Overall, revenue from advertising reached $296.9 million in the three months to the end of quarter, which looks less impressive when compared against the $407.2 million reported in Q2 2009.

Display internet advertising revenue accounted for the second largest proportion of this revenue, after AOL Properties, at $120.4 million, which could mean fewer companies are investing in AOL's website promotion display internet services. Earnings from the display category declined by just 13 per cent overall compared to the same period in 2009, although international advertising revenue halved - from $20 million last year, to $9.7 million in this period.

Search and contextual advertising also saw significant declines, falling from $146.7 million in Q2 2009 to $105.8 million this year. Fewer domestic search queries are believed to be behind this decline, although the fall in international search is also thought to have contributed a $7.5 million loss compared to last year.

Commenting on the results, AOL chairman and chief executive officer Tim Armstrong underlined the positives that the company will take away from the quarter two performance.  He said: "We continued our efforts to successfully reposition AOL for growth and the company is getting healthier every day. Although we have much more significant goals for the future of AOL, we are pleased with this quarter's internal and external trends."

Data released by comScore in June revealed that AOL lost a small proportion of its share of searches compared to May.

Overall, AOL's share of searches among the top five engines declined by 0.1 percentage points, down from 2.3 per cent in May to 2.2 per cent in June.

Google sites maintained the largest proportion of searches at 62.6 per cent, but saw the largest decline in June of 1.1 percentage points.