AOL Dumps Ad Agency

After less than a week on the job, AOL’s new executive vice president of brand marketing, Leonard Short, decided to dismiss the beleaguered Internet unit’s ad agency, Interpublic Group’s Gotham.

After working with Gotham for eight years, AOL will put the account up for review. The AOL Time Warner Internet unit spends nearly $1 billion on marketing annually.

“As AOL implements its new strategies and looks to the future, we feel we will be best served exploring a new agency relationship,” Short said. “We’ve had a successful and productive partnership with Gotham.”

Short’s move comes just four days after he was named to his post. He came to AOL from Charles Schwab, where he helped launch the broker’s online trading site.

The new agency will need to craft a message consistent with AOL’s new corporate strategy, which is to focus on getting users to move from dial-up connections to broadband offerings. With higher-priced broadband products, AOL hopes it can make up for the steep decline in online advertising revenues. This year, the company said it expects ad revenues, which were down 40 percent this year, to fall an additional 50 percent.

Over the weekend, AOL founder Steve Case resigned as chairman of AOL Time Warner under continued criticism of AOL’s performance. It was just the latest management shake-up at the troubled ISP as the company struggles to right itself.

Gotham parent Interpublic had a tough year itself in 2002, as the sprawling ad company struggled in the second year of an advertising recession. Its problems were compounded by accounting problems at one of its largest agencies, McCann-Erickson, which restated its earnings by $181.3 million in November.

Gotham, which was founded in 1994, said it did $623 million in billings last year. The agency’s client list includes Fidelity Investments, Bausch & Lomb, and Priceline.