AOL FIRES GOTHAM

New Brand Marketing Chief Strikes Quickly

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NEW YORK (AdAge.com) -- America Online's new executive vice president of brand marketing, Leonard Short, today fired Interpublic Group of Cos.' Gotham, New York, the beleaguered online service's agency of record, after only five days on the job.

Gotham had served AOL for eight years, most recently helping it launch AOL 8.0. A Gotham executive declined to comment. An agency review is being handled by Pile & Co., Boston which declined to comment. Gotham will not participate in the review.

'World's best work'
On Jan. 9, Mr. Short told

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AdAge.com that it was too soon to speculate on the possibility of an agency review. "This is a very dynamic brand situation, we need the world's best work." AOL declined to make Mr. Short available today. Mr. Short, a former Charles Schwab executive, started at AOL on Jan. 6.

"As AOL implements its new strategies and looks to the future, we feel we will be best served exploring a new agency relationship. We've had a successful and productive partnership with Gotham," Mr. Short said in a prepared statement.

Cost management
AOL Time Warner's executive vice president and chief financial officer, Wayne Pace, said at an investor conference Jan. 9 that America Online this year will have a "relentless focus on cost management." The division spends about $1 billion annually on all marketing efforts, he said, and that will be reduced this year by an unspecified amount.

"It's sort of like the old zero-based budgeting, defend every dollar you spend," he said. AOL executives "are committed to reducing the overall spend but to utilizing a portion of dollars that they are taking out to reinvest in the product" in narrowband and broadband services, Mr. Pace said. The cost-cutting "is starting right now, and you will see benefits in the '03 results," he added.

Mixed signals?
However, this runs counter to AOL's analyst briefing Dec. 3 in which AOL's CEO, Jon Miller, took pains to reassure analysts and executives that marketing would not be targeted for cuts, particularly as AOL prepares to roll out new broadband initiatives and content packages.

AOL spent $127.5 million in measured media from January to October 2002, according to Taylor Nelson Sofres' CMR. The figure includes house ads running across AOL Time Warner sibling divisions.

"There's a tremendous effort being put into brand marketing," an AOL executive told AdAge.com today.

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