AOL takes its headquarters to New York

— -- "If you're in the advertising business, you have to be in New York," says AOL CEO Randy Falco, who joined the company in late 2006.

On Monday, AOL announced several initiatives along with the corporate move, aimed at making the once-dominant Internet brand vibrant again.

AOL, which has acquired several advertising companies, said it would merge them all into a new entity called Platform A.

"Advertisers are looking for scale and efficiency," says Ron Grant, president of AOL.

Grant cited statistics from measurement service ComScore Media Metrix that AOL's combined Platform A and AOL sites, such as AOL.com, MapQuest and Moviefone, give it 94% reach to all Internet users.

"Now was the time to get in front of the curve and realign our business accordingly," he says.

AOL owns Advertising.com, which specializes in placing display ads on websites, Third Screen Media, which sells ads for mobile media, video ad agency Lightningcast and behavioral targeting specialist Tacoda. According to ComScore, Advertising.com alone reaches 89% of Internet users, compared with 84.7% for Yahoo, 83.2% for Google and 57% for MSN/Windows Live.

Falco wouldn't say how many employees will move to the New York location at 770 Broadway. But he noted that top executives would be based in New York, while many staffers will still remain at AOL's current home in Dulles, Va., working on AOL's old dial-up business and new projects.

Since shifting gears in mid-2006 — when it began offering its former paid subscription services for free — AOL's subscriber base has dwindled to 10.9 million, from a high of nearly 25 million in 2002.

Meanwhile, AOL says advertising revenue has grown 16% since making the switch.

Greg Sterling, an analyst at Sterling Market Intelligence, says that on paper, the AOL moves make it a stronger company. "The proof is how the network performs," he says.