Cash-strapped America Online plans to target small businesses as it faces a 41% tumble in ad revenues this year.

Parent AOL Time Warner expects the struggling internet unit to post advertising sales of $1.6 billion (€1.6bn; £1bn) in 2002, down from $2.7bn last year.

Eager to find new sources of cash, AOL is reportedly developing a new version of its internet service designed to help small-sized firms. It could be launched, say insiders, within the next couple of months.

Business customers account for an estimated 10% to 20% of the online firm’s 35 million global customers, though it has so far failed to offer them customised services.

AOL’s adspend woes are by no means representative of online advertising as a whole. Despite the troubles of its biggest player, the sector is expected to be flat or only marginally down in 2002 compared with the $7.2 billion revenues generated in 2001.

According to Nielsen/NetRatings, internet spend jumped 15% year-on-year in the third quarter, bouncing back from an 8% slide in the first half.

Data sourced from: multiple sources; additional content by WARC staff