Armstrong faces tough challenge to revitalise AOL

AOL's $350bn merger with Time Warner in 2000 was a defining moment of the dotcom boom. The image of Steve Case, chief executive of America Online, embracing the chairman and chief executive of Time Warner, Gerald Levin, hit the news headlines of every TV bulletin in the Western world.

Steve Barrett is editor of Media Week
Steve Barrett is editor of Media Week

Roll forward almost a decade and things have changed exponentially, and not as predicted. The promised new distribution channels, cross-promotional initiatives and joint content deals never materialised and the two entities found it much more difficult to work together than anticipated, culminating in May's decision to separate AOL as an independent company concentrating on online services, while Time Warner focuses on cable and media.

AOL has had a turbulent 18 months and the man entrusted with knocking the one-time dotcom darling back into shape is Google's former head of US ad sales, Tim Armstrong, who joined AOL in March and has given his first UK interview to Media Week (see page 12).

After Armstrong's three-month review, the Platform-A initiative, which brought ad sales, ad networks and ad technologies under one umbrella, has been canned and now goes under the AOL Advertising moniker.

Chief executive Randy Falco and European chief executive Dana Dunne have left, and head of overseas operations Brendan Condon has gone back to the US. The Bebo social network, acquired for $850m last year, has 12 months to prove itself or it will probably be offloaded. And Armstrong is renewing AOL's focus on content, vowing to double its UK properties to 200 within 18 months.

The company desperately needs a coherent identity and management unit. It needs a clear strategy and heightened focus on customer service to make it easy to do business with and give agencies a viable alternative to Microsoft, Yahoo and Google. Armstrong is clearly a smart operator and single-minded in his approach, but he has a tough challenge on his hands to restore AOL's mojo in such a fast-moving, dynamic and demanding media space.

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