New York — Ever since AOL has established itself as the widest-reaching online advertiser with its Platform-A, who better to take over as CEO than a Google advertising guru? Time Warner’s CEO Jeff Bewkes on Thursday announced that AOL’s present chairman and CEO Randy Falco will be replaced by Tim Armstrong, the longtime mentor of Google’s ad business and board member of the Advertising Council, the Interactive Advertising Bureau, and The Advertising Research Foundation, to lead AOL, in what was seen as a bold move to reverse the fortunes of the struggling Internet unit in preparation for a spin-off.
Tim Armstrong, the longtime mentor of Google’s advertising and commerce operations in North America, is leaving the search giant to take the reigns at AOL.
“Tim is the right executive to move AOL into the next phase of its evolution,” Bewkes said in a statement.
Bewkes called Armstrong an advertising pioneer, who has “a resounding reputation and proven track record.” Armstrong will also be of crucial importance in Time Warner’s decisions about the future of the AOL brand.
The appointment was a welcome surprise to Wall Street analysts, who see Armstrong as a respected executive who had overseen Google’s Americas operations. He is best known for his work in developing Google’s online advertising business and was widely touted last year as a CEO candidate for Yahoo Inc.
“At Google, Armstrong helped build one of the most astounding and successful media teams in the history of the Internet — helping to make Google the most popular online search advertising platform in the world for direct and brand marketers.”
Analysts, advertisers and bloggers have become increasingly vocal about the future of AOL in recent weeks. Several have publicly called for Falco and Grant’s ouster.
Just this morning, Pali Research analyst Richard Greenfield issued a blistering missive titled “AOL’s Randy and Ron Show Must End.” In that note he wrote that AOL’s EBITDA had declined 50 percent since 2006 when Falco and Grant came on board.
Greenfield and others have been particularly critical of AOL’s seemingly endless series of shifts in focus, such as betting heavily on the ad network business with the formation of Platform-A , followed by the recent shift back to emphasizing original content and traditional brand selling. AOL has also been slammed by many for last year’s $850 million acquisition of the social networking property Bebo.
Armstrong now replaces Randy Falco, an ex-NBC executive, who will exit the company after a transition period, as will AOL Chief Operating Officer Ron Grant, Time Warner said. Falco and Grant were appointed in November 2006.
Bewkes has publicly said he is looking for the best way to resolve the future of AOL at Time Warner, including either a spin-off or merger with a partner such as Yahoo or Microsoft Corp’s MSN.
Armstrong, who most recently was in charge of US operations for Google, said he was “very excited about the opportunities presented in leading AOL”.
“AOL has a wide-ranging set of assets and audience,” he said. “The company is well positioned to enhance those assets into a larger share of the Internet audience and advertiser communities.”
Armstrong’s departure from Google was seen by some as part of a trend of executives leaving the Web search leader. Last year, former senior sales executive Sheryl Sandberg left Google to join Facebook as chief operating officer. There has also been speculation that Marissa Meyer, another popular executive who oversees its search page, may leave Google.
“Armstrong was clearly an important executive during his tenure,” said Christa Quarles, Thomas Weisel Partners. But she added, “I think Google is now a large enough organization to be able to absorb the loss of any single executive.”
AOL was a powerful player in the early days of the Internet but has lost ground since then and has been trying to refashion itself as a popular one-stop Web portal.
AOL.com is the number four gateway to the web after Google, MSN and Yahoo!
Armstrong, who most recently was in charge of US operations for Google, said he was "very excited about the opportunities presented in leading AOL.
"AOL has a wide-ranging set of assets and audience," he said. "The company is well positioned to enhance those assets into a larger share of the Internet audience and advertiser communities."
Time Warner shares were largely unchanged in after-hours trading, after rising 5.18 percent to $8.32 in New York Stock Exchange.