ANALYSIS: AOL's broadband message breeds skeptical response

AOL is spending millions to market its new broadband service, touting sophistication over ease of use. But the media is not impressed.

AOL is spending millions to market its new broadband service, touting sophistication over ease of use. But the media is not impressed.

Having just rolled out a $35 million marketing campaign to hype its broadband services, AOL is doing nothing to hide the fact that its future is in high-speed internet offerings, not in its tens of millions of dial-up subscribers. Facing a subscriber list whose growth appears to be stunted, not to mention a plummeting stock price, the still-fresh ouster of its CEO, and a probe into its accounting by the SEC, the company's future success, which was not so long ago an apparent sure thing, is now in jeopardy. "It's not an understatement to say that transitioning to broadband is critical to AOL's survival," says David Cassel, who runs the AOL Watch newsletter. "Unfortunately, there's been a lot of very bad business news coming out about AOL. They're being investigated by the SEC. Steve Case resigned. And the stock has fallen [by] close to 80%. That's got to have some impact on the business reporters who read AOL press releases." The unveiling of the broadband strategy late last year has run into a wall of skepticism erected by the news media. An analysis by Carma found that recent coverage has focused on AOL's failure to bring dial-up customers over to its broadband service, its failure to provide exclusive content, and its tardiness in coming to a highly competitive market (see sidebar). A relatively low nine out of 28 stories expressed "cautious support" for the strategy. "This is really a change in business model," says Carma's Hugh Clifton. "And it has not been embraced by the media." AOL is no stranger to bad press, however. This is the company, after all, that was the butt of many a routine on late-night TV monologues. Despite its successes in building brand recognition, the most familiar artifacts of the AOL juggernaut - the start-up CD-ROMs and the "You've got mail" alert - were easily twisted into jokes. Despite the guffaws AOL eventually caused, these things contributed to an image centered on user-friendliness. But, as internet users have matured, that image has grown tired. And much as it leapt out to an early lead among ISPs, AOL has fallen behind in the fierce struggle for the broadband future. It's clear from the much-anticipated marketing push that the company is trying to tell a different story about broadband, shedding its reputation as a place for newbies by imbuing it with a sleek sophistication. Its centerpiece is an ad campaign created by BBDO that features Sharon Stone - a major departure from the testimonial ads that ran on late-night television. "What the new ads say to me," says Rob Walker, who writes about advertising for Slate.com, "is that AOL is trying to position itself as a choice for more sophisticated people. They don't want to come across with ads that look cheap or that look so simple as to be almost naive. They want to get across the idea that AOL offers a high-end experience - so everything about the ads needs to be high-end in terms of both the message and production values." Major role for PR What's less clear is how the company, which has over the years developed a reputation for being aloof with reporters, is communicating this message to an intensely interested press. AOL will not talk about the PR approach it's using to complement the ad campaign. Says a spokeswoman, "AOL does not generally discuss behind-the-scenes PR strategies." But it is clear that PR will play a major role in establishing just what AOL Broadband is. "One of our big challenges is that we have to let people see [the product] from outside the service," EVP of brand marketing Len Short told AdWeek recently. "They have to see it to know what we're talking about." The ends, if not the means, of AOL's PR efforts thus far are evident in the dozens of stories that have run since December. An AP story laid out AOL's main challenge: getting long-term dial-up subscribers to stick with AOL as they upgrade to a faster connection. "Analysts are skeptical," it read. "AOL Broadband tends to be pricier and, so far, little different from such aggressive competitors as Microsoft and Earthlink." Indeed, in the early stages of the marketing campaign, it was unclear why subscribers would be willing to pay a fee for AOL on top of their monthly payments for high-speed access. "The ads I've seen pretty much dodge this question altogether," says Walker. "I gather that AOL has added various bells and whistles available to customers using high-speed connections, but the ads don't make a particular case for them." Which is where, to some extent, PR is coming in. Following the rollout of the ad campaign, AOL Time Warner, the online division's parent company, has tried to differentiate its broadband product by making web content from outlets like People and Entertainment Weekly available only to subscribers. A flurry of stories followed, many addressing the long-running issue of whether customers will be willing to pay for content. But the overall effect of that news is to hint at the wealth of content at the fingertips of the company, as well as bring into focus a portrait of the broadband strategy. "The real promise of the AOL-Time Warner merger was that they'd have content to deliver," says Tim Robinson, managing partner at CoreBrand. "The challenge for them is to keep talking about the other companies whose content they have access to. They need to step up that messaging and truly deliver the broadband content." Failing to make a strong pitch There is no consensus about what the negative media attention means to the future of AOL Broadband and, by extension, to the future of the brand. Most agree that this future is by no means assured, partly because the marketing campaign hasn't made a strong-enough pitch for what AOL Broadband will bring to the table that others don't. One bright spot amid the coverage is that a deepening investigation by regulators is being treated as a discrete story. A recent New York Times story about AOL's disclosure that it overstated revenue by up to $400 million over two years made no mention of the broadband push, even though that has captured most of the press attention about AOL this year. AOL Watch's Cassel says this news will hit home more with investors than consumers, though, he adds, some of the less shining moments in the history of the merger - such as Case's resignation - were big news for more than the business pages. "The problem is that AOL has been getting bad marks for customer service," he says. "So even those who form their opinion solely on experience may be losing faith in the brand." Walker says a less-than-fawning press doesn't necessarily mean that broadband won't work. "I'm not sure that's what they should be worried about," he says. "AOL has gotten negative press for pretty much the entire history of the company, and it didn't prevent it from signing up, by a huge margin, the most subscribers of any ISP. "I just think, right now, it's a lot harder to figure out what AOL has to offer a broadband customer," Walker adds, "and that shows in the ads." Whether this message will come out in other ways remains to be seen.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in