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Interview: AOL’s Armstrong: You’re Going To See More Changes

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Following a roundtable breakfast with the new *AOL* to kick off Advertising Week, I caught up with CEO Tim Armstrong and got in a few questions (along with MediaMemo’s Peter Kafka). Overall, Armstrong said that he’s relying on AOL (NYSE: TWX) employees to tell him where to make the big changes and the cuts, such as last week’s elimination of the COO and the head of search and local media.

Armstrong expects those decisions to be set by the end of this year, with the announcements coming early in 2010. Meanwhile, he insists that his focus is not just about where to cut, but also where to add. Right now, he’s starting the search for a chief marketing officer, looking for someone who can think broadly — as opposed to an online or offline specialist. And he said that AOL has farther to go in terms of connecting all the various parts of the business. Case in point: Platform-A was a “platform” in name only, he said. “You’ve got parts of that business that were never connected.” Oh, and those reports that Third Screen Media is for sale? No decision yet, he says.

paidContent: As part of last week’s restructuring, AOL is now looking to land a “world class chief marketing officer.” What exactly are you looking for?

Armstrong: AOL hasn’t spent a lot of time on marketing the last few years. We feel there’s a great opportunity right now who’s marketing the brand. We want someone who is dynamic and energetic, but also, most importantly, someone who can tell a really simple story. Our strategy is pretty crystal clear. We want to back that up with a very simple message.

How far along are you?

We’re at the early stages of it. We’ve had a lot of interest from outside parties and we’ll see how it goes. If you’re in that space and you want a tremendous challenge, the AOL brand turnaround is got to be one of the tougher jobs. So we want someone who wants a tough job.

Do you want someone with specific online experience or a generalist marketing exec?

We’re looking for someone who is a world-class brain on brands. If you get too focused on someone who has offline experience or someone who has just online experience, we may miss what we really want, which is a real thought leader, someone who challenges us to think differently about what we’re doing.

You had the [latest] reorg last week. How much more shifting should we expect to see?

Last week’s announcement was more about operational changes for me about how we’re running the company. I think you’re going to see more. The one thing that we’re not going to escape from at AOL — and we don’t want to escape — is how do we run this company, how do we provide advertisers with the best ROI and for the staff to have the best employee experience. That all really comes down to change. AOL is not going to change itself by incremental movements. And I would expect us to continue to change the structure of the company a lot over the next few years.

Are these large cuts? Or cuts at the top?

We’re running an initiative called Project Everest. It involves about eight or 10 teams across the company, which go deep into the employee organization and ask them to come up with ways to structure the company. So if you’re in the UK, or U.S. or India or Canada, in a lot of cases, the people who work on our products and services actually know where the inefficiencies are. They know where the company should deliver value. We’re collecting all the feedback and at the same time, we’re looking at the revenue plans. These projects will go on through the end of this year. I would expect announcements about that by early next year. The employees are fairly clued in to where we are right now, so I feel good about where we are right now.

You had said mobile will be part of everything AOL does going forward. SAI reported last week that mobile ad net Third Screen Media could be shut down. Any truth to that?

Someone might know the answer to that, but we haven’t discussed Third Screen Media with anyone yet. Any reports you read on this aren’t coming from me, we haven’t made any final decisions. Mobile’s a really important part of our future. We’re focused on mobile from two angles: one is to make sure all of our products and services are available 24/7 on all platforms. Secondly, as the mobile ad market continues to grow, we’ll continue to make more investments in that space.

You’ve already shown a desire to simplify the brands at AOL — getting rid of Platform-A and just having AOL Advertising, for example — do you feel AOL has too many brands and needs to do more simplifying and paring down?

In general, when you go through the segmentation of what consumers and advertisers use from us, there is a broad range of products and services — but there is not an infinite amount of brands. AOL has launched a lot of brands and done a lot of acquisitions over the past few years. I think it’s important for us to simplify that. Looking at it from the inside, it also helps us tie the systems together. From a standpoint of what makes an internet company great, it’s riding on internet-scale technology. There are parts of AOL where brands were never integrated into the system. On the service, Platform-A may have been called a platform, but in reality, was there a platform there? No. The systems were all separate. We’re going through a very deep process to integrate all the systems.

It’s Advertising Week, you’re an ad guy. Are you seeing a rebound or is the decline slowing?

You’re seeing a fundamental shift from something that was declining to something that’s at least bottoming out. As the economy turns around from marketers’ changing cost structures and revenue planning, they have to start marketing again to drive revenue. I think everyone is getting out of the mode of just ‘cost-cut, cost-cut, cost-cut.’ They’re starting to say, ‘I can’t miss the turnaround, so I better start planning.’ Most of the customers we’ve seen are planning new dollars. Not everybody, but there’s a new cycle and that’s refreshing to see.