AOL Restructures Again, Moves to NYC

After 22 years in the Dulles/Reston area of Virginia, AOL will move the majority of its operations to New York City to be closer to the hub of worldwide advertising, which makes up a good deal of its new business model.

The company's new headquarters, as well as its advertising and programming operations, will be located at 770 Broadway, where it has leased office space. AOL said today it will continue to maintain a presence in Dulles, Va. and Mountain View, Calif., among other locations.

"New York City is the center of advertising, so it makes perfect sense to locate our corporate headquarters here," chairman and CEO Randy Falco said in a statement. Falco and other senior staff are affected by this move and will relocate. AOL is not sharing exactly how many or who is moving.

Company officials say these steps are necessary in order to better position AOL in the global advertising market. Since transitioning from a subscription-based model to a primarily free ad-supported one last August, the company has struggled a bit.

Ad revenues are up markedly, however subscription numbers are obviously way down, and ad sales are not enough to offset those losses. As of June 30, the company had 10.9 million paying subscribers for Internet access, which was down more than half from its peak of 26.7 million in September 2002.

The company's apparent struggles to attract advertisers in recent months is making matters worse. AOL scaled back expectations for ad sales after the second quarter due to advertisers opting to place their ads on third-party networks rather than AOL directly, which obviously means the company receives a smaller cut then it would otherwise.

Platform A, which combines the networks of all its recent ad acquisitions with the company's own network, is being marketed by the company as central to its return to solid ad growth. Together, the offering is able to reach about 90 percent of US Internet users, it says.

Through this network, advertisers have a one-stop shop to sell their product: through the third-party network of Advertising.com, a mobile network from Third Screen Media, video-ad serving platform Lightningcast, and global ad serving from ADTECH.

"Advertisers are increasingly demanding quality, scale and measurable results, and the new Platform A organization delivers that, Falco said.

In separate news, AOL also announced that it had expanded its relationship with computer manufacturer HP to place AOL's portal and toolbar on computers worldwide. Previously, the agreement only called for such an arrangement among computers sold in the US.

About 30 countries will get the new services in their local languages within two years, according to reports.