In an abrupt move on June 13, 2012, AOL pulled the plug on AOL News and all links were redirected to the Huffington Post. The next day, AOL launched the premium (meaning it’s not free) Huffington iPad app which will feature long-form content and high resolution media for $1.99 per month. In other words, something unusual (although not unheard of – -think of Google and YouTube) happened on that day — a company that acquired another dropped its own brand name and product a year after the acquisition and replaced it with the acquired company’s brand name and product. Let’s take a closer look.
Since AOL acquired the Huffington Post for $315 million last year, AOL News has had significantly more traffic than the Huffington Post. According to Jeff Bercovici of Forbes, at the time of the acquisition, AOL News had 22 million monthly unique visitors. That’s 40% more unique visitors than the Huffington Post had at that time.
To many people, AOL’s decision to shift its news product to the Huffington Post brand name might be surprising. It’s far more common for the acquiring company to drop the other company’s brand names — either quickly or over the course of a longer transition period that can span a year or more.
But shifting this part of AOL’s content business to the Huffington Post brand name has its benefits. For example, the Huffington Post brand name promises news and commentary. The AOL brand name still struggles to find relevancy. Similar to the strategic problems at Yahoo!, AOL’s strategy remains unclear to outsiders.
According to AOL CEO Tim Armstrong, that shouldn’t be the case. As reported by Bercovici of Forbes, Armstrong explained to investors in a June 14th conference call that the AOL strategy hasn’t changed much since it broke away from Time Warner nearly three years ago. He said, “Essentially, I think we started out with a strategy saying we wanted to be the first large digital content company of this century and of the information age, and that continues to be what we’re targeting.”
AOL might have realized the mountain that would need to be climbed in order to transfer the Huffington Post brand promise and associated consumer perceptions of the brand to AOL was simply too high and would take too long to surmount (if it could ever be accomplished). Visit the Huffington Post home page today, and there is no mention of AOL at all. Even in the footer area and the About Us page, where you’d expect to see a reference to the parent company, there is no mention of AOL.
Keeping the Huffington Post brand separate from the AOL brand is an example of a decentralized branding strategy that allows each brand to stand on its own. A decentralized strategy also enables each brand to fail on its own, thereby protecting the parent company from negative fallout. We’ll take a closer look at brand strategy related to mergers and acquisitions in my upcoming series on the AYTM blog, so stay tuned!
Overall, the biggest short-term down-side to this decision is one that AOL is surely scrambling to rectify. When AOL News shut down, all of its archived content was lost. Old AOL News links redirect to huffingtonpost.com, not to the intended content. This oversight represents a huge loss of valuable content archives. Certainly to achieve the company’s goal to “be the first large digital content company of this century and the information age,” the loss of those content archives (even if it’s, hopefully, only temporary) doesn’t help the AOL brand promise.