AOL takes its headquarters to New York

— -- Aiming to be better positioned to take on rivals Google goog, Yahoo yhoo and Microsoft msft, AOL twx is moving its corporate headquarters to New York City.

"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.

Sterling notes that the AOL/Yahoo/Microsoft/Google race is "turning into the online version of the broadcast networks in their heyday — everybody wants to be the one-stop shop for advertisers."

AOL's Monday announcement "creates the perception of an upswing," Sterling says. "In a way, this is the culmination of their transition from a dial-up business to an advertising network. This is the new coat of paint on the house, and they can say it's done. Now let's see if the orders come in."

AOL also said Monday that it cut a deal with No. 1 PC maker Hewlett-Packard hpq to have co-branded AOL/HP welcome screens on new PCs.