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2007

AOL Packs Up New Ad Platform, Moves To Big Apple

September 18, 2007 0

“Internet chameleon AOL consolidated its various online advertising properties on Monday in what the company said was the “final stage” of its transformation into an ad-supported business.”

Looks like the “A” in AOL actually stands for “Advertising!” The once-mighty Time Warner-owned online media company on Monday announced a shakeup that will place ad revenue squarely in its corporate crosshairs, grouping its advertising properties — Advertising.com, as well as the recent acquisitions of behavioral ad firm Tacoda, mobile unit Third Screen Media, video ad outfit Lightningcast and Adtech — into a new entity that it calls “Platform A.”

AOL completed the final stage of its evolution to becoming a full-blown Web media company on Sept. 17, moving its corporate headquarters to New York City and unveiling an integrated ad platform that incorporates online advertising assets from five acquisitions.

“The new enterprise, named “Platform A,” will be accompanied by a change of scenery from Dulles, Va., to New York City.”

The company is coupling Platform A’s launch with a major move of its corporate headquarters to the nerve center of the advertising industry, New York City.

After seeing its fortunes rise and then tumble as an Internet access provider, AOL, a division of Time-Warner, announced a series of changes the company hopes will make it a contender in the ever-expanding online advertising market.

The two announcements are the outward manifestations marking AOL’s realignment from “an access business to a global, ad-supported Web company,” it said.

“The move will enable AOL to better take on Google, Yahoo and Microsoft in the fight for the online ad dollar.”

The integration of these disparate parts together with AOL’s third-party ad network, Advertising.com, will make it easier for advertisers to place ads on third-party Internet sites in addition to AOL’s own web pages.

Platform A will provide advertisers with the opportunity to purchase space over the whole of AOL’s network on its various sites and those of third parties. It works through a combination of technologies and services provided by online advertising-related companies AOL has recently purchased. In essence, it will give businesses a one-stop shopping experience to be seen by the greatest number of eyeballs possible.

Moving its corporate headquarters from Dulles, Virginia to New York will put AOL in the center of the ad world. “New York City is the center of advertising, so it makes perfect sense to locate our corporate headquarters here,” said Randy Falco, chairman and CEO of AOL.

“With these changes, Randy Falco, Ron Grant and their team have positioned AOL to benefit fully from the trends that are reshaping the online advertising business and to expand AOL’s leadership in it,” said Jeff Bewkes, president and COO of Time Warner. “Advertisers are increasingly demanding quality, scale and measurable results, and the new Platform A organization delivers that.”

“The company’s new headquarters will be in leased office space at 770 Broadway in the NYU-heavy, Starbucks-friendly gray area between the Union Square, East Village and NoHo neighborhoods.”

The company’s top executives will find new digs in leased office space at 770 Broadway, where they will join advertising and content production staff already based in the city. The move will take place next spring; however, “significant operations” will continue at the Dulles, Va., campus, offices in Mountain View, Calif., and other locations, AOL said.

“We do not think portals are big enough to meet the demands of advertisers,” AOL Chief Operating Officer Ron Grant said. “We will be adopting the network model on a global basis.” Grant added that AOL began working on the new structure since last December.

Mike Kelly, formerly head of AOL Media Networks, leaves in the restructuring. The new Platform A unit will be managed by current Tacoda CEO Curt Viebranz, who will supervise a range of ad offerings that contain both branding and performance-based networks and properties, an in-stream video ad network, a mobile network, a behavioral targeting technology and ad network, and a site-side ad management solution.

“Today’s reorganization positions the company, formerly based in Dulles, Va., as a viable threat against media and search vendors Google, Yahoo and Microsoft.”

AOL, Google, Yahoo and Microsoft are looking to bank as much of the online advertising market, which analysts claim is worth several billion dollars, as possible. To do that, the vendors need to build out traffic to their sites, by offering valuable Internet services over PCs and smart phones.

With the growth of the online advertising market, AOL’s competitors have also been going after third-party networks. Yahoo has signed up the likes of eBay, Comcast, and a consortium of newspaper websites, Microsoft recently acquired AOL competitor aQuantive, and Google dominates third-party text ads with its AdWords platform.

“All of them have built out their war chests through acquisitions.”

AOL decided this renovation in its intention to realign its advertising business and expand a deal with Hewlett-Packard Co. beyond the United States, as part of a move to take its properties and services into more than 30 countries in the next two years.

“AOL said it would now provide HP with co-branded local-language versions of its Internet portal, its toolbar and its search services for use on HP computers in countries around the world.”

The former American giant among Internet service providers, which had more than 30 million subscribers, aims to create a one-stop shop for advertisers seeking to market their products and services on its own site as well as on other properties across the Web.

AOL’s transformation from the top branded Internet service provider to an advertising power began after the company saw users flocking to Google, Yahoo and Microsoft for richer Internet services.

For the time being, the battle for online advertising will be waged primarily between Google and Yahoo, said an IDC analyst Karsten Wielde, however, he noted he can see a time when AOL and MSN also rank in the upper echelons.

“There is a need for companies like AOL and MSN, but for now it is between Google and Yahoo.”