America Online’s ad revenue fell 20% in the first quarter year-over-year. Undoubtedly, this is another troubling sign that AOL’s transformation into an advertising-supported business isn’t a good idea.

Time Warner Inc. is seeking to spin off the Internet company and is looking for any alternatives that might change the situation. Whether AOL is being actively shopped around has not been confirmed yet, as representatives of the Time Warner Inc. are still deciding what would be best in a time of global crisis.

On the other hand, things haven’t been that bad for other companies that make their money off advertisers. In the case of Google Inc., which generates most of its money from online ads, there has been a growth in revenue of 6% in the first quarter, while Yahoo Inc. had a 13% increase revenue in this first quarter.

AOL has consistently underperformed in online advertising since early 2007, we’ll see if they’ll be able to come up with a different strategy.