AOL unveils unified ad platform, heads for NYC

AOL has integrated its various ad networks into a single platform that it hopes will jumpstart its online advertising business, whose weak growth in the second quarter has led to sharp criticism of this Time Warner subsidiary.

On Monday, AOL announced that the integrated ad platform, called Platform A, meshes Advertising.com, Tacoda, Third Screen Media, Lightningcast, and AdTech.

AOL also announced it will move its headquarters from Dulles, Virginia, to New York City, in order to be physically at the center of the U.S. advertising industry.

However, the announcement comes at a time when questions about AOL’s strategy and performance are at a high point.

In August, when Time Warner issued its second-quarter financial report, some observers were surprised that AOL’s online ad revenue grew only 16 percent during the quarter, well below the industry average. In the first quarter, online ad spending in the U.S. was up 26 percent year on year, according to the Interactive Advertising Bureau. Last year, spending grew 35 percent over 2005.

AOL in recent years has been transitioning its business model from one based on subscription fees to one based on online advertising. Toward that end, it has made almost all of its content and services freely available on the Web and discarded its “walled garden” approach.

Until the second quarter, AOL’s online ad growth had either been in line with the industry average or exceeded it, justifying the strategy change. But the quarter’s results led some financial analysts to openly question if AOL can successfully pull off its transformation into an online ad-supported business.

Time Warner has been investing in AOL’s online ad platform. In 2004, AOL acquired Advertising.com, a provider of online marketing services to publishers and advertisers, and last year it bought Lightningcast, a broadband video advertising specialist.

This year, AOL snapped up Third Screen Media to boost its mobile advertising services, and also acquired AdTech for its ad-serving and marketing campaign-management platform. Most recently, it bought Tacoda, which specializes in delivering ads based on users’ online activities, an area known as “behavioral targeting.”

With Platform A’s unveiling on Monday and the move to Manhattan, AOL executives are convinced that the subsidiary will get its online ad business back on track.

AOL is no stranger to corporate shakeups and reorganizations. Almost a year ago today, it announced a significant realignment of its internal business structure, only to see its then-CEO and Chairman Jonathan Miller get his walking papers two months later.

Miller’s replacement, Randy Falco, unveiled major changes to Miller’s plan in mid-December amidst a shakeup that saw several high-ranking executives head out the door.

Separately on Monday, AOL also announced an agreement with HP to offer co-branded, localized versions of AOL’s portal, toolbar and search engine on HP desktop and notebook PCs sold worldwide.

The agreement extends and expands an existing relationship between the companies of a co-branded AOL-HP portal as the default home page in HP consumer PCs sold in the U.S.