AOL’s Huffington Post Acquisition: An Epic Fail - Jaffer Ali

Huffington39s apparent interest in real journalism is fundamentally at odds with AOL39s desire to massproduce profitable content The only way to reconcile these apparent conflicts is with the understanding that most of what Armstrong and Huffington have stated publicly and to their respective constituencies is just fluff amp8211Patricio Robles EconsultancyWhile I agree with the above sentiment I believe the acquisition of HuffPo by AOL fails on an additional more existential level The defective meme in AOLamp8217s strategy is one that overwhelmingly believes that the road to riches is to scale supplyWhatI know that most people believe in the notion that adding MORE SKUs if you are a retaileramp8230adding MORE content if you are a publisheramp8230adding MORE choices within your business model is a solid strategy But it simply isnamp8217t Let me explain whyThe real amp8220paradox of choiceamp8221 regarding business models has little to do with Barry Schwartzamp8217s insightful thesis that more choice leads to less happiness A simple business principle suggests that scaling choice before you have figured out how to monetize what you have is a recipe for disaster The increasingly crowded automotive field offers a clear case in point to wit GM will make more revenue this year with four brands than it made last year with eight brandsLetamp8217s explore what I mean a little further AOL has amassed considerable eyeballs Yet itamp8217s safe to say that the recent announcement that their decline in display advertising of 23 in last yearamp8217s 4Q was caused by one or both of the following1 They cannot properly monetize the eyeballs presently under their control2 They are experiencing a precipitous decline in eyeballsBy attempting to scale a virtually limitless supply instead of addressing a finite consumer demand amp8211 there is only so much time and only so many eyeballs to go around AOL is spending their time and money on the wrong end of the equation MORE contentamp8230MORE choice does not necessarily make a better business model And in AOLamp8217s case they just spent 300 million in cash because they are looking for love in all the wrong placesWhy does the Super Bowl reach 100 million viewers when the same time period on the same channel the night before reaches only 2 million viewers Itamp8217s not as if there are fewer channel choices on a single Sunday in February Itamp8217s not as if the Internet shuts down for the day The reason the Super Bowl reaches 100 million viewers is because it only happens once a year amp8211 the ultimate illustration of limited choice producing greater scale Itamp8217s the same reason why 60 million viewers tuned in to the Beverly Hillbillies each week in the 1960s when there were basically only three commercial channels to choose among on televisionA business model that has good content in limited quantities and can scale reduced choice is the model to chase More and bigger is not betteramp8230better is better I wrote about this in amp8220Choice and Scaleamp8221 but the thesis is worth repeating here If what you are doing is not working doing MORE of that is not a way out The aphorism amp8220if you want to get out of a hole stop diggingamp8221 is operative as is Albert Einsteinamp8217s sage observation that amp8220No problem can be solved from the same level of consciousness that created itamp8221But Armstrong and company keep shoveling just the sameRead all Jafferamp8217s MediaBizBloggers commentaries at On the Other Handamp8230Check us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerMediaBizBloggers is an openthought leadership blog platform for media marketing and advertising professionals companies and organizations To contribute contact Jackmediadvisorygroupcom The opinions expressed in MediaBizBloggerscom are not those of Media Advisory Group its employees or other MediaBizBloggerscom contributors Media Advisory Group accepts no responsibility for the views of MediaBizBloggers authors

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AOL’s Huffington Post Acquisition: An Epic Fail - Jaffer Ali

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AOL’s Huffington Post Acquisition: An Epic Fail - Jaffer Ali

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