The pendulum has gone full swing at the world’s largest ISP America Online, from the wildly Pollyanna-ish ad revenue projections of the goldrush days leading to its merger with Time Warner to near-pathological caution about the year ahead.

AOL’s online advertising and accounting practices are currently under scrutiny by the Securities and Exchange Commission and the Department of Justice following its inflation of ad revenues by an estimated $190 million over two years [WAMN: 24-Oct-02].

It’ll not repeat that creative lapse this year. The online giant now predicts ad revenues for 2003 will slump by between 40% and 50%, while overall revenues are expected to remain flat. No improvement is expected prior to the third and fourth quarters – and even then, AOL isn’t getting numeric.

An AOL spokesman summarized the problems faced by the division: “These include sinking advertising revenue, a federal investigation into accounting practices, slowing subscriber growth, and uncertainty about whether the service will be able to grow quickly among those with high-speed online access.”

Data sourced from:; additional content by WARC staff