Advertising Overhaul Among Changes at AOL

By Rachel Metz

NEW YORK -- It might seem an odd move for a company that relies on money from advertising. Yet AOL is reducing the number of ads it shows on its home page and some other Web sites it runs.

The maneuver is one of the changes new CEO Tim Armstrong, 38, has brought to the long-struggling Internet company since he took over AOL in April. The former Google (GOOG) executive was hired to recharge AOL and lead its spinoff from Time Warner(TWX), undoing a legendarily disastrous deal.

Armstrong is expected to detail his strategy for reviving AOL at a meeting Friday with its employees, the Wall Street Journal reports.

To prepare for AOL's rebirth as an independent company later in the year, Armstrong and other executives say they are trying to recapture elements of the culture AOL had when it was a startup -- back when it was America Online and on its way to becoming the dominant provider of dial-up Internet access.

These days, AOL is focused on getting revenue from ads it sells for its own Web sites, like celebrity gossip blog TMZ, and for third-party sites, while the dial-up business slowly evaporates (though it still has 6 million subscribers). It's been a profitable formula, but revenue has been falling: In the first quarter, sales fell 23% to $867 million.

With 7,000 employees spread around the world, it's a stretch to think AOL can feel like a Silicon Valley startup, with employees whizzing down the halls on skinny scooters. But Armstrong says certain decisions -- like getting rid of some advertisements -- will alter AOL's culture and help it regain favor.