AOL making a play for online advertising

17th October 2007

One-fifth of AOL's work force are to be laid off. It is the company's latest attempt to switch its focus from internet provider to online ad seller.

In a memo leaked to the press, the company detailed how the 2,000 cuts would allow AOL to be more flexible and expand in the advertising industry.

Randy Falco, chief executive at AOL, said: "This realignment will allow us to increase investment in high-growth areas of the company while scaling back in areas with less growth potential or those that are not core to our business."

The move follows the company's purchase of ad-buying service Advertising.com in 2004 and then Tacoda, an ad-placement service this year.

AOL profits have struggled as fewer people pay for internet accounts, preferring high-speed cable and telephone companies. The company responded by offering free email and search services, similar to Google and Yahoo!.