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As Ad Business Shifts to Machines, AOL Restructures Its Sales Staff in a Major Reorg

Simplify, definitely. Simple, not so much.

According to numerous sources, AOL is now initiating long-planned changes to drastically reorganize its advertising sales staff, a move which is likely to result in an unspecified number of layoffs at the New York-based portal.

While there will also be hiring in new areas of business in a restructuring designed to orient the company toward its more promising businesses going forward, the changes have shaken the AOL divisions in charge of revenue.

It’s not clear how many ad staffers will be let go, but a number of competing tech companies told me this week that they have been inundated with resumes from AOL sales execs in anticipation of the changes. And I have been similarly pinged by many worried about the impact of the shifts.

The ad moves, which will see top execs in modified roles, also comes as the company is culling some of the many underperforming content properties it owns, sources said. That will also mean cutting and shifting of a large number of jobs in its Brands group.

Why do you care about this latest round of musical chairs at AOL? Because it clearly represents what a content-and-advertising focused company — in the same boat as rivals like Yahoo — must do as the advertising landscape changes quickly, moving from a business of premium display sales to “programmatic” advertising.

Simply put, rather than people, negotiations and insertion orders, programmatic is the use of machines to buy ads using big data. It is obviously more efficient, especially as the targeting technology improves.

Currently, about 40 percent of AOL’s business is programmatic, a number that has increased dramatically and will do so even more going forward. Thus, if software ends up selling up to 80 percent of ads, it’s pretty clear that the sales force must be reshaped and, really, winnowed down.

At AOL, that will mean the collapsing of several sales teams into one, moving specialized ad people (servicing flagship content properties like the Huffington Post and TechCrunch) into a central organization led by Bob Lord. He is currently is CEO of its Platforms unit, in charge of ad tech products like Reporting to Lord will be Jim Norton, who is now global head of media sales, and Don Kennedy, who is president of AOL advertiser platforms.

In the new setup, Norton will be in charge of sales and brand sales and Kennedy will be leading programmatic. In an unusual reporting structure, several AOLers said most sales people could report to both execs and sell both ad products. That is different than how AOL has sold its advertising before, a system in which a large group of salespeople have been split by region, type of ad, advertiser category and content properties.

Despite the changes that are squarely aimed at the inevitable automation of advertising, sources said AOL will continue to build high-level teams aimed at custom content, top customers and enterprise sales.

Overall, the goal, said one person with knowledge of the situation, is to have the salesforce match AOL’s new products, as well as larger secular trends in the ad space. Among those will be new video efforts, including mobile video.

Sources inside the company said it was adding head count in these new areas, and also doubling down investment in its most successful content brands.

“[CEO Tim] Armstrong has drawn a line of growth needs, and anyone falling below that line will be gone, and everyone above it will presumably get more resources,” said one person with knowledge of the budget plans now being completed.

TechCrunch had reported about several pending site closures within its Brands group last week — rumors of which have been brewing since the beginning of the year (I asked Armstrong about them at CES, which he declined to comment on). It’s not clear how many jobs those changes will impact, but cuts from the shuttering of underperforming sites could eventually number in the hundreds.

Reached yesterday, Armstrong again declined to comment, despite numerous tips I referenced from AOLers reeling at the changes in sales and content units.

To be fair, it is not like AOL execs did not signal exactly what was coming in several public comments.

In an interview last week in Investor’s Business Daily, Lord was asked what the shift toward programmatic meant for AOL ad sales staff. Said Lord: “There’s a need for a more well-rounded ad sales expert in the market. It’s a re-crafting of the job rather than an elimination of the job. Understanding the data and the analytics behind the data and the algorithms is a really important selling point.”

Even before that, in AOL’s third quarter call several months ago, for example, Armstrong noted changes coming in 2015:

“Number one, we’ll focus our capital allocation resource management and management time against scaled assets and platforms. Two, we will organize our asset portfolio around scaled value and scaled growth assets. Three, we’ll simplify everything that can be simplified.”

Simplify, definitely. Simple, not so much.

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