Sept. 17 (Bloomberg) -- AOL, the Internet division of Time Warner Inc., will move its corporate headquarters to New York and set up a network to help advertisers purchase online ads and track the effectiveness of their campaigns.

Top executives will relocate from Dulles, Virginia, to new offices at 770 Broadway near Union Square in April, AOL Chief Operating Officer Ron Grant said today. He declined to say how many people will work in New York and if there will be job cuts.

Employees responsible for advertising and creative programming will also transfer to the new location, centralizing New York-based ad companies AOL acquired in the past three years. The Time Warner unit said the move is the final step in its strategy to become an advertising-focused company. Some offices will remain in Dulles, where AOL has 4,000 workers.

``Moving out of Virginia to New York is a signal that historically the company has been one way but is now evolving into something else,'' Michael Nathanson, an analyst at Sanford C. Bernstein & Co. in New York, said in an interview.

AOL will transfer 400 to 500 people who are already in New York to the new building, Grant said. The company bought closely held ad company Tacoda this month and started offering e-mail for free last year to attract more users and advertisers. It bought the Web site Ad.com in 2004.

``The growth is clearly on Ad.com and ad-supported mediums and you have to be in New York to participate in those businesses,'' said Nathanson, who has an ``outperform'' rating on Time Warner shares and doesn't own any.

Consumer Behavior

Tacoda gave AOL the ability to place ads based on consumers' online behavior. AOL, which previously focused on Web-access subscriptions for revenue, is competing for ad money with larger rivals Yahoo! Inc. and Google Inc. Richard Parsons, chief executive officer of New York-based Time Warner, will assess by year-end whether AOL's focus on online advertising was the right strategy. A fifth of AOL's 10,000 employees work in Bangalore, India.

Second-quarter sales at AOL plunged 38 percent to $1.3 billion as it lost 1.1 million paying subscribers, Time Warner reported last month. AOL's advertising sales gained 16 percent.

Time Warner fell 40 cents, or 2.2 percent, to $18.24 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have declined 16 percent this year.

AOL also announced today an agreement with Hewlett-Packard Co. to install an AOL-branded toolbar on Web browsers and make AOL the standard for Internet searches on all HP computers.

Nathanson said he expects Time Warner to spend $100 million this year restructuring businesses including AOL. So far the company has spent $27 million on those purposes, he said.

``It will be a smaller operation that gets moved to New York,'' Nathanson said.

New York is home to agencies owned by Omnicom Group Inc., Interpublic Group of Cos. and WPP Group Plc that buy online ads for corporate clients.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: September 17, 2007 16:14 EDT