The move came one day after new America Online CEO Jon Miller significantly shook up the management ranks of the interactive unit. The online arm also dissolved the controversial Business Affairs unit, still under investigation by the Securities & Exchange Commission and the Department of Justice concerning accounting issues pursuant to ad and e-commerce deals. Mr. Kelly's appointment was first reported on AdAge.com. Today is his first day at the company.
As such, Mr. Kelly offered few details of his upcoming tenure in a brief interview. "My plan is to be very client- and agency- focused," Mr. Kelly said, "which at the end of the day is how all selling" works.
Longtime AOL executive Myer Berlow ran GMS until his role at the company was significantly reduced in the spring. Mr Berlow had reported to exec VP Mayo Stuntz-now out of the reporting structure at GMS-who then reported to former Chief Operating Officer Bob Pittman. AOL in the past had done little work with agencies, and some clients griped GMS deals fashioned under Mr. Berlow's watch required a heavy chunk of AOL business.
Mr. Kelly's hiring, and his direct report to Media & Communications Group Chairman Don Logan (his former boss at Time Inc.) testifies further to the newfound muscle flexed by Time Warner and its Time Inc. unit.
The appointment "is a good decision," said a company insider. "He's smart, and he's effective, and maybe he'll understand the politics." However, it remained unclear what will change in GMS's structure, staffing, or the deal-making process. "This happened so quickly I haven't even had a chance to think about that," Mr. Kelly said.
In Mr. Kelly's favor is the direct report to Mr. Logan, which some see as a recipe for quicker action. He'll need it, given the gargantuan scope of the company.
"This guy will help change the tone, but I'm not sure the business model is sound for most advertisers," said one media buying executive.
Intracompany relationships will be examined closely. "I've been told that in the near future, some or all of us on the Ad Council"-which is comprised of divisional ad chiefs-will hear Mssrs. Kelly and Logan's "views on how we will relate to one another," said Bob Sherman, president of AOL Interactive Marketing in charge of AOL's ad sales.
The moves come as the world's largest media company continues to sputter, with its stock price trading below $13, down from a post-merger high of $56.60. Last week, the company reduced guidance for its AOL unit while predicting that strong performances from other units meant year-end earnings before interest, taxes, depreciation and amortization goals remained on-target. However, some analysts' EBITDA estimates are below the company's. Analysts have speculated in recent news stories that the company may wish to drop "AOL" from its name.
contributing: wayne friedman