AOL to Lay Off Approximately 700 in Rolling Cuts

Confronted with heavy declines in digital ad spending, AOL plans to lay off approximately 700 staffers. The cuts will affect roughly 10 percent of the Time Warner unit’s global work force, and will be mostly complete by the end of March.

“Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars,” Falco said in a memo to AOL staffers. “As a result, we will be reviewing our entire organization to further align resources and expenses against the real revenue opportunities in this difficult market.”

Many of the cuts will occur in units that don’t directly support AOL’s three core businesses: Platform A, its ad network unit; MediaGlow, consisting of AOL and other in-house sites; and People Networks, its social media cluster containing Bebo, AIM, Goowy and other properties.

AOL products that do not reside within those three core areas, and are therefore potential cost-cutting targets, include video search platform Truveo and MapQuest.

Falco said additional steps have been taken to cut costs, including freezing merit-based pay increases and consolidating its two facilities in Mountain View into one.

Other publicly traded companies have reported a similar fall-off in demand for display advertising. In its earnings report this week, Yahoo reported a drop in the volume of premium display ads it’s able to sell. And The New York Times said online ad revenue in Q4 fell 3.5 percent, a sharp reversal of its growth trajectory of 15 percent during the previous nine months.