Six months into its acquisition by Verizon for $4.4 billion, AOL is doing some trimming of its workforce. TechCrunch has learned, and confirmed, that AOL has laid off around 100 employees, as it looks to eliminate overlap with its new owner and decentralize some functions.
“The market changes and we at AOL change ahead of the market,” Caroline Campbell, AOL’s SVP of of Brand and Communications, said in a written statement. “As we have continued to do over the last six years, we have re-aligned a handful of key customer functions to put our consumers and customers more squarely at the center. We have done 3 years of deals in the last 6 months. We are aligning the organization for the same level of growth in 2016.”
This latest round of layoffs break down as two-thirds in AOL’s Membership division, and the rest in roles like marketing, advertising and social that were not tied to any specific AOL-owned brand like TechCrunch or Huffington Post, but instead worked across several organizations. The company is looking to take away some of that operations layer and put more emphasis on people who are working on specific businesses.
To that end, from what we understand, there is also going to be some hiring in the first part of the new year; and some of the people who were laid off yesterday may move to other roles as a result of the strategic change.
On the Membership side, it’s not too much of a surprise to see AOL trimming staff. Things like AOL dial-up subscriptions have — surprisingly, considering the wider trends in the market and AOL’s own emphasis on content and ad tech — continued to account for a significant chunk of AOL’s revenue. Even as late as 2013, Membership was AOL’s biggest revenue generator.
More recently, Membership is still a significant but decreasing revenue area. In Q1 of this year — the last time AOL filed financials as an independent company — Membership accounted for $182.6 million, or about 30% of revenues. But Internet subscriptions and customer service connected to that are also areas that massively overlap with what AOL’s new owner, Verizon, does. So in a move for integration and cost efficiencies, it makes sense that this would get addressed.
But even while AOL is working on ways to decentralize some functions, it’s also looking at ways of leveraging economies of scale to help vault its brands and advertising into the next generation of media business.
Earlier today, Tim Armstrong, AOL’s CEO, was on stage at Disrupt in London, where he commented on how the plan will be to invest more into individual companies; and work on moving away from outdated ad formats like display ads, and outdated metrics like page views.
From what we understand, this may come with a larger overhaul. This could include several brands moving on to a new CMS to help create native ads that would run across several properties and also so that AOL could interface more easily with third-party platforms like Facebook and its push into Instant Articles. AOL appointed a new EVP and president for its content and consumer brands, Jimmy Maymann, in September 2015, who is looking at how to improve these areas in a more concerted way.
Verizon has shown that it’s in an acquisitive mindset in its shift to becoming more of a media business and there have even been rumors that it could be one of the companies interested in making an offer for Yahoo, and perhaps other properties that are seeing their valuations getting hit in the market today.
It will be worth watching whether Verizon-owned AOL lays off further employees as it focuses on what is growing and cuts out what is not. AOL currently has around 6,000 employees, and in January, ahead of the Verizon sale, AOL closed several sites that were underperforming and eventually laid off 150 employees, with an emphasis in sales.
A video of Armstrong’s appearance at Disrupt is below: