NEW YORK (AdAge.com) -- Time Warner cleaned out the executive suite at troubled internet unit AOL, appointing Google President-Americas Operations Tim Armstrong chairman-CEO.
Mr. Armstrong replaces former NBC Universal exec Randy Falco, who was named CEO of AOL in 2006. Also ousted was Mr. Falco's deputy, Chief Operating Officer Ron Grant, a longtime Time Warner executive who once served as deputy to Time Warner CEO Jeff Bewkes.
In a statement, Mr. Bewkes said Mr. Armstrong is the right executive to "move AOL into the next phase of its evolution."
"At Google, Armstrong helped build one of the most successful media teams in the history of the internet, helping to make Google the most popular online search-advertising platform in the world for direct and brand marketers," Mr. Bewkes said.
Wanted to be a CEO
As an early Google employee who opened the company's Mountain View, Calif., office in 2000, Mr. Armstrong doesn't need the money, but he was known to want to become a CEO, and his name surfaced for other big internet jobs, such as when Yahoo searched for a replacement for former CEO Jerry Yang.
But with Mr. Armstrong's departure, Google loses its most visible and trusted liaison to Madison Avenue, which has embraced search as a marketing vehicle but mistrusted Google as a steward of brand dollars.
"AOL has a wide-ranging set of assets and audience," Mr. Armstrong said in a statement. "The company is well-positioned to enhance those assets into a larger share of the internet audience and advertiser communities."
Mr. Bewkes indicated that the appointment of Mr. Armstrong does not mean AOL won't be spun off, sold or merged with another portal, such as Yahoo. He said Mr. Amstrong will "be helpful in helping Time Warner determine the optimal structure for AOL."
The move ends the turbulent tenure of Messrs. Falco and Grant, characterized by deep cost-cutting, diminished morale inside the company and the $850 million deal for also-ran social network Bebo a few months before the stock-market bubble burst last year.
Google's growing pains
The hire is a huge surprise to the ad industry. In recent years, Mr. Armstrong has been an advocate for better relations with large advertisers and ad agencies. Google's advertising business was initially built through a self-service model that worked well for smaller advertisers.
Google's growing pains In the past few years, Google experienced some growing pains as it tried to adapt its ways to work with larger advertisers -- and their agency intermediaries. It has alternated between success and stumbles and along the way earned the nickname of "frenemy" from WPP Chief Executive Martin Sorrell, who runs the world's largest ad holding company.
"Tim has worked very hard to embrace the advertising business and its clients and needs of biggest advertisers and short tail of the market," said Rob Norman, CEO of WPP's Group M Interaction. "I would hope if he's going there it's for some really, really interesting challenge that's groundbreaking. And I wish him luck."
Google CEO Eric Schmidt released a statement: "Since arriving at Google eight and a half years ago, Tim Armstrong has been a critical force in Google's advertiser-facing operations. We're very sad to see him go, but would like to take this opportunity to wish Tim every success and good fortune in this new role at AOL -- one of Google's longest-standing partners. He's one of the most creative, fun and respected leaders in the ad industry, and we have all loved working with him at Google. We'll announce an internal candidate as Tim's successor in the coming weeks and are delighted Tim will remain with Google for the next month to help oversee this transition."
Google and AOL have had a close relationship over the years. Google powers AOL search, for example, and paid $1 billion for a 5% stake in the company in 2005. Last month Google wrote down the value of that stake by $726 million and exercised its right to have Time Warner buy back the stake at "fair market value" as of July 1, 2008, or take AOL public.
'They need a leader'
Mr. Bewkes praised Messrs. Falco and Grant for integrating various ad-network acquisitions into AOL's ad network, Platform-A, and reshaping the company from its internet-access roots to an ad-supported media and services company, a process begun under former CEO Jonathan Miller. But ad-industry execs said AOL will benefit from different leadership. Mr. Amstrong will start at AOL in April.
"I think they need a leader, and I think they're getting one," said Jean-Philippe Maheu, chief digital officer at Ogilvy. "Google was a successful story for him, but at AOL there are a lot of pieces to cobble together to make a whole that makes sense."
"He's got ROI experience, plus relationship power, and has been running an incredible business with a very high growth rate," said Sean Finnegan, president-chief digital officer of Starcom MediaVest Group. "We'll see if he can use those skills to inflate AOL, which has a series of premium brand assets and community but has been challenged. With the right person at the helm, there's the ability to breathe life into it."
"It's a reason for all of us in [the marketing] community to take a second look at AOL," said Bryan Wiener, CEO of 360i. "If Tim believes there's hope this could be an asset."
The next question is who will replace Mr. Armstrong in leading Google's U.S. advertising sales. "He will be missed, but Google has a very deep bench," Mr. Maheu said. Among likely candidates are former DoubleClick CEO David Rosenblatt, who is a Google VP and president of the company's global display advertising, and Penry Price, VP-ad sales in North America.