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AOL's Armstrong: This answers the $43B online ad question

Measuring the impact of the nearly $43 billion online advertising industry will prove to be as important as Detroit's move from "horses to autos," AOL Chairman and CEO Tim Armstrong told CNBC on Wednesday.

With the Internet quickly moving to "measurement everywhere" for calculating the return-on-investment for marketing efforts, AOL wants to lead that charge, he added.

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To that end, AOL has made another acquisition in the space, scooping-up big-data ad-measuring company Convertro in a deal worth $100 million. Convertro helps clients gauge how their advertising efforts are working, and uses that data to drive programmatic buying strategies across all platforms.

Andrew Harrer | Bloomberg | Getty Images

"The first phase of the Internet has been about recognizing marketing basically on a last-click basis. The last ad you saw is what really gets attributed to the value in the advertising," Armstrong explained.

"The future of the Internet is really going to be something called 'exposure to conversion' which is taking into account all the advertising you saw leading to up to conversion," he said, adding that Convertro has best-in-class technology for tracking this activity.

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U.S. interactive advertising revenues hit an all-time high of $42.8 billion last year, according to the IAB Internet Advertising Revenue Report. Increasing 17 percent over 2012, that total exceeded broadcast TV for the first time ever. Television pulled in $40.1 billion in ad revenues last year, said the IAB.

AOL—such as Google, Facebook, and many other digital companies—is dependent on those online advertising dollars, and Armstrong said global ad sales increased for the 11th straight quarter at his company: rising 16 percent to $433.4 million.

The digital media and entertainment division saw its seventh quarter in a row of consumer traffic growth, which also helped to fuel better-than-expected earnings and revenue.

AOL announced Wednesday that first-quarter earnings, excluding items, were 34 cents a share. Analysts had expected the company to earn 45 cents a share.

Shares were getting crushed Wednesday, down more than 18 percent in morning trading. (Click here for latest AOL stock quote)

Net income attributable to AOL fell to $9.3 million, or 11 cents per share, from $25.9 million, or 32 cents per share, a year earlier.

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AOL also reported an 8 percent rise in first-quarter revenue, helped by that increase in ad sales. Revenue rose to $583.3 million from $538.3 million for the quarter ended March 31. Analysts had expected the company to report revenue of $578 million.

AOL owns the Huffington Post news website and the TechCrunch blog, which has been holding its influential "Disrupt" tech conference in New York City this week. Yahoo CEO Marissa Mayer will participate in an interview there Wednesday.

Disclosure: CNBC has a content-sharing partnership with Yahoo's finance site.

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By CNBC's Matthew J. Belvedere. Reuters contributed to this report.

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