Despite the lift in advertising, overall revenues were down 3% to $576.8 and net income plummeted 66% to $22.8m.
Ad revenues were boosted by display, up 15% to $170m, but this rise was offset by a 8% decline in search to $88.4m.
Revenues from subscriptions dropped 18% year on year to $194.6m
Tim Armstrong, chairman and chief executive of the company, said the Q4 results signify a "large step forward" and "highlight AOL’s ability to methodically improve our consumer offering".
The company has moved in recent years from its roots as an ISP to becoming an ad-funded content business. As part of this strategy it has made some high profile acquisitions, including the Huffington Post and Techcrunch.
It said that traffic was flat from Q3 2011 as "growth in the Huffington Post Media Group sites offset declines at MapQuest and AIM."
It did not break down ad revenues for its various internet properties.