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AOL launches new ad program

America Online announced a new program that expands commercial advertising on its service. Separately, the company's president and COO resigned after only four months at the job.

America Online announced a new program today that significantly expands commercial advertising on the number-one online service.

The program delivers guaranteed viewership of ads based on the traditional print standard of CPM, or cost per thousand. The new strategy was announced two weeks after AOL became the main advertising agent for Netscape Communications' highly trafficked Web site.

AOL's previous advertising program was limited to displays on only a few hard-to-find screens or within specific content providers' areas, and most of the advertisers were already signed up as content providers, a spokeswoman said.

The program announced today will allow advertisers to buy space throughout AOL's proprietary service, as well as its Web site. Advertisers will also be able to build custom areas, such as shopping rooms, on AOL.

The company is focusing on expanding its advertising revenue just as it comes under heavy fire for its billing practices, which the Federal Trade Commission has begun investigating after users filed class-action lawsuits in several states.

The company also underwent a management shakeout today as AOL president and COO William Razzouk resigned. The reason Razzouk gave for quitting was his unwillingness to move his family from Memphis to Washington, D.C. But in his wake, AOL chairman and CEO Steve Case will take over all of his responsibilities, saying in a prepared statement that it "would be helpful to AOL" for him to take a more active role in day-to-day operations.

The internal changes did not seem to faze the stock market, where AOL closed at 42-1/2, up 3/8 from yesterday. But the company has not likely seen the last of its financial obstacles.

The nascent Web advertising market is proving stubbornly unprofitable, and there are no estimates yet of how much AOL stands to gain by opening its proprietary service to advertising. The company is hoping to attract advertisers by guaranteeing 150,000 "impressions"--defined by AOL as "actual page views"--for $9,000 a month.

On the AOL Web home page, 1 million guaranteed impressions cost $20,000, the same as what Netscape now charges, although that rate is expected to go down in the next few weeks. AOL's ad rates may change as well: the rate card posted now will expire on June 30, and a company spokeswoman would not comment on upcoming changes.

To track viewership and establish credible rates, AOL has hired Nielsen Media Research to audit and verify AOL's internal audience measurement systems and to help set up additional tracking systems.

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