As long as I can remember internet being in my life, AOL has been there, in my mailbox. First it was the floppy disks, and then they moved up to CDs. My first visit to the AOL headquarters (in 2000, my dotcom startup wished to play with the big dogs) was memorable mostly for the huge conference tables, made of some sort of concrete mixed with thousands of tiny pieces of AOL CDs. I've seen AOL CDs hung from trees like Christmas ornaments, strewn in empty lots, filling up my toybox (the boys, they love the DVD cases).
Jon Miller wants to end all that. The New York Times takes a closer look at the reaction to his radical proposal to halt marketing of the AOL subscription service, and asks all the same questions Peter Cohan asked, like: how much subscription revenue (of the $7 billion in the past year) will AOL lose? And how long will it take the $1.2 billion of advertising revenue to fill in the gaps? And, is this just the flavor-of-the-quarter for Jon Miller, king of the "let's reinvent AOL" plans?
Jessica Reif-Cohen of Merrill Lynch is skeptical, and says, "things are going to get worse before they get better." David Cohen of Universal McCann says it's not a home run but the plan is "directionally positive." (That's faint praise if I've ever heard it.)
The online advertising seems like a bright future to everyone asked. "The relaunch of AOL.com has been the fresh start they needed," says Jeff Lanctot of Avenue A Razorfish. "If I were AOL, and I had all the incentives Time Warner has, I would do what they are doing," says Marc R. Goldston of United Online.
But how bright, how soon? "AOL is like Chicago after the Chicago fire," says Michael Zeman of Starcom MediaVest. (Try as I might I couldn't figure out for sure if Zeman thinks this is a good thing ... but I think so.) The Times makes a point of drawing out Miller's many other ideas for re-inventing AOL: methinks the paper is a critic.
Rob Hyndman isn't opaque in his judgment, saying that the plan's problem: " this has been left so late, that it's difficult to see what AOL could credibly become." Perennial critic Cynthia Brumfield of IP Democracy doesn't mince words, either: "For those of us who have been watching AOL sink deeper and deeper into non-sensical gambits to right its listing ship, today's New York Times piece by Saul Hansell is just more evidence of the chronic flailing characteristic of the online giant."
I hate seeing all those CDs in the mail, and not just for its environmental impact. But the gap between $7 billion and $1.2 billion is really big ... a lot bigger than I would be comfortable with, were it my decision.
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Reader Comments (Page 1 of 1)
7-10-2006 @ 8:25PM
garrett lumbattis said...
better late thwn never.
7-10-2006 @ 9:36PM
Sean said...
Sarah,
*Raises hand*
Yeah, the revenue gap between the current situation and a pure audience strategy is big. But most of that chunk of revenue is still from the dialup business. Noone is saying cut out the access side completely. What they are saying is, stop marketing it...
You work at AOL (I know this because that hallway shot you took is fairly recent ;)). Go ask the folks in Access how profitable those "business saving" broadband bundles are for the company. The answer? Not very. At least that's what I heard from the people who helped ink those deals when I was working at AOL.
"Giving AOL away for free" really, in my mind, translates to "Let's stop marketing the access business and let's start really transitioning the momentum over to audience." We all know that the dialup subscription base is declining and that the new members AOL is able to bring in A.) don't spend a lot of money (so it's a bad demographic for advertisers) and B.) don't stay very long (so it's bad for the bottom line of the company). Why bother spending a lot of money to either A.) seduce people into an overpriced broadband package that isn't really that profitable for AOL and/or B.) seduce people into a dialup business that draws from a smaller and smaller group of people?
So it's time to turn that marketing engine around and do what Yahoo does...start marketing the web propreties. AOL Music has a lot of innovative content that very few people know about. (Even friends of mine who work in the music industry say it's a great site, although navigationally it could stand some improvement). Let's also market the AOL finance site which includes things like Blogging Stocks. Let's market those niche sites, and maybe link people back to the general AOL.com
Because here's the dirty secret that noone wants to talk about. While AOL is still one of the top properties on the web (in terms of viewership), where do people visit most (at least according to Alexa web search)? Webmail.aol.com. And as the access subscriber base declines, less and less people will use the AOL webmail service. Which translates to a smaller audience share, which translates to less advertising dollars. It's time for AOL to start marketing those new web properties and draw in some readership. Because, honestly, a clear audience strategy in conjunction with transitioning away from the access business is the only way AOL will continue to survive.
-Sean Ginevan
Formerly of AOL, LLC