The atmosphere at AOL headquarters in Dulles, VA, must be funereal. The Time Warner Inc. unit has lost 9 million paying subscribers in the past four years – almost one in three from its peak. It is expected to lose at least 6 million more in the next year and 9 million over three years. Do the math: The current subscriber base is 17.7 million. And now its parent intends to slash 5,000 jobs, or one-fourth of AOL’s strength.
AOL’s pullback is justified as part of a $1 billion cost-cutting plan to move it from an Internet service provider to an advertising-supported portal like Yahoo and MSN with free, capacious e-mail accounts. The little marketing that will be done likely will focus on transitioning dial-up Internet access customers to AOL’s broadband service, an area that needs work and diligence given intense competition from cable providers and telephone companies.
If the restructuring works – switching from primarily subscription support to advertising dependence as well – AOL’s off to a decent start. If it doesn’t, Time Warner may decide simply to sell the brand.
Still, what a sad time for a pioneering brand that once was almost a parallel Internet and even inspired a movie. But that’s the fate of brands that fail to change shoes with the terrain.
Admitted, this is not the time for sharp elbows or even schadenfreude. Few global companies have lasted as long as AOL has. But even with this makeover, what gives Time Warner the confidence that consumers will flock to the AOL brand, even if it’s free? Will the offer of a free e-mail account or the ability to keep the prized AOL address be enough? What does AOL stand for?
Any student of marketing knows you have to stand for something for the consumer to discriminate in your brand’s favor over others. So that’s something AOL has to figure out: its positioning and its value proposition.
Yahoo stands for fun and attitude and a cornucopia of information. Its lead in e-mail, news, finance and entertainment are formidable. MSN has Hotmail’s e-mail advantage and a deep-pocketed Microsoft parent’s blessing. Google’s search, news and mapping tools make life incredibly easy. And AOL? Parental controls.
AOL has so much going for it. Time Warner has some of the best magazine and television properties. The company’s strengths in entertainment are almost unassailable. Perhaps Time Warner should tear down various brand fiefdoms and parlay some of that content onto AOL.com. Why not ensure that AOL is the best broadband portal there is? That’s a spot open for the taking, especially as we transition to Broadband America – a market alive and kicking.
