Rise of the robots at AOL lead to job cuts

Kaja Whitehouse | USA TODAY

NEW YORK — Media company AOL laid off roughly 150 employees Friday, or 3% of its staff.

The bulk of the layoffs, or close to 100, were in sales, a result of the company's surging growth in so-called programmatic ad sales, according to a person with direct knowledge of the situation who was not authorized to speak on the record.

The remaining cuts will come from AOL's corporate offices, including legal and HR, as well as from a planned consolidation of certain media sites, this person said.

AOL will fold Apple fan blog TUAW and gaming site Joystiq into tech website Engadget, the source told USA TODAY. It will also unite AOL Autos with AOL's Autoblog website.

In total, the 150 cuts represent about 3% of the New York company's 5,000 in staff.

The consolidation is part of AOL CEO Tim Armstrong's vision to "focus on the biggest brands and make them bigger," the source said, referring to Engadget, TechCrunch and Huffington Post.

The reorganization and corresponding layoffs come as Armstrong seeks to streamline costs and focus on AOL's growth prospects, which include its move toward automated large-scale ad sales using computer algorithms, known as programmatic ad sales.

Last quarter, AOL said revenues from programmatic surged to 37% of non-search ad sales, up from just 12% in the third quarter of 2013.

The growth is expected to be even bigger when AOL reports fourth-quarter financial results Feb. 11.

Automated ad selling is cheaper and therefore desirable at a time when companies like AOL and Yahoo are struggling to grow profits from so-called display ads, which appear across websites, on their branded sites.

Last quarter, Armstrong grew AOL revenues by 12%, but display ad revenues from branded sites grew just 1%.

Despite the move toward consolidation, Armstrong plans to spend more on AOL's brands like Huffington Post this year, the source told USA TODAY.