The AOE is signaled by an emote that says something like "prepares to spray blood in front of him".
Ulvaug is rooted during the AOE. The group should stand under him between the hind legs during the fight, and the tank should joust to the the same position to avoid the AOE.
Using a MA and burning down the adds quickly is helpful. Either make a targeting macro (/target Blood of Ulvaug) or open your threat window (/togglethreatwindow) and target them there. While this is useful up to 50%, they double their spawn rate below 50% and easily become overrun.
At 50%, Ulvaug's rate of bleeding doubles every 5 seconds.