AOL Moving Headquarters To New York

AOL will move its headquarters from its sprawling campus in Dulles, Va., to New York next spring as the online company tries to retool itself as an advertising company that competes with the likes of Google, Yahoo and Microsoft.

The move, announced today, speaks to how much the online world has changed around AOL, which became a high-flying Internet stock in the 1990s by providing dial-up Internet connections in millions of American households.

AOL, which is part of Time Warner, will base all of its advertising sales out of New York through a group the company is calling Platform A. That group will be lead by Curtis G. Viebranz, the former chief executive of Tacoda, an advertising targeting company that AOL acquired in July for a reported $275 million.

AOL also said in a memo to company employees today that Mike Kelly, president of AOL Media Networks and a longtime Time Warner executive, will leave AOL after the transition. He was brought in to head ad sales at AOL in 2004.

As with most of AOLs recent history, the move to New York symbolizes a shift away from the companys roots, and analysts said it could portend coming job layoffs of some of the companys 4,000 employees based in northern Virginia.

A year ago, executives announced the company would make its Web portal and e-mail services free and generate money through advertising rather than by providing those services and Internet connections to subscribers. Since then, AOL has acquired a string of online advertising technology companies, including Tacoda, and revamped its Web content to try to attract more visitors.

AOLs leadership in this space was theirs to lose years ago, and they did lose it, said Shar VanBoskirk, an analyst at Forrester Research. This move is a great one, but my concern is: is it too little, too late?

AOL executives put a good face on the move, which is certain to be disruptive in Virginia. AOL executives did not say how many employees would move from Virginia to the new 152,000-square-foot office, leased at 770 Broadway, just south of Union Square. Time Warners corporate headquarters is about three miles uptown, at Columbus Circle.

If youre going to be in the advertising business, you have to be in New York because thats where all the agencies are, thats where all of the media money is controlled, on Madison Avenue, said Randy Falco, chairman and chief executive of AOL.

In an interview, AOL executives explained that they see the companys advertising revenues coming more in the future not only from its branded Web site but also from thousands of publishers sites across the Internet that let AOL sell ads on their pages.

AOL will use targeting technology from Tacoda to capture data about consumers Web surfing and translate that information into a road map for delivering different ads to different people each time they log on. AOL will also use that data to sell ads in its Advertising.com unit, which delivers ads to its own network of outside publisher sites.

Theres really been a shift in advertising to the network business, said Ron Grant, AOLs chief operating officer. Portals arent really big enough to meet the needs of advertisers.

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