The Rise And Fall (And Rise?) Of AOL

AOL, which recently abandoned its "pay-to-play" model, is now trying to succeed as a free service in a very crowded marketplace. Can it succeed? We look at AOL's past and its possible future.

Jennifer Bosavage, Editor In Chief, Solution Providers for Retail

October 4, 2006

4 Min Read

Will Work For Free
So what are AOL's chances? "AOL was known to offer a kind of 'Internet Lite'" notes Betterly. "But is that even wanted now? There's no more so-called 'walled garden,' but who will turn to AOL for content when there are so many other well-established brands to choose from? What compelling reasons must AOL give potential customers for switching?"

AOL contends that there is plenty worth coming over for: video services, music, and -- perhaps central to its existence -- communities. For example, Weinstein points to AIM Pages, a new social networking site in which users design and personalize their own pages, as the foundation for what AOL terms a "next-generation community offering."

Crucial to AOL's success are those 100 million unique visitors that Miller referred to in his statement. Advertisers will only be interested in AOL if there is healthy traffic flowing in and out. And that traffic will only be maintained if they are attracted by AOL's offerings.

The question facing AOL right now is: Can it get its brand right? Does it know what to do, and, just as importantly, does it know how to do it? Some believe it does. "Just imagine the power of the AOL brand once it gets every employee focused on the one big goal of building the world's biggest and most engaged audience based on brand utilitarianism," says Robb Hecht, adjunct marketing professor at Baruch College and owner of the blog Media 2.0, where he analyzes business branding issues. "AOL owns and operates [instant messaging service] ICQ. It owns and operates Mapquest, Netscape, Moviefone, Weblogs, Cityguide, and And, now it has other non-AOL branded media properties such as In2TV, TMZ, and Engadget that are all hits. If AOL gets its brand right, AOL could re-establish itself as the 'go-to' social online media property it was originally destined to be."

"AOL is, in fact, re-focusing on community via its new AIM Pages and blogging platforms," Hecht explains. "In this way, AOL will truly re-enter the social networking business, a category the company actually invented."

But Frankel is among the experts who doubt the company can pull it all together. "AOL has no message. It could reinvent itself, but it won't," he says, noting that one big step toward correcting AOL's course would be for it to develop a strong brand strategy. "A good brand strategy is getting people to see you as the solution to their problems. You start to figure out what people want. Then you over-deliver so much that they can't live without you. But AOL has the worst marketing and advertising. Remember, it's not about what you want to sell, it's what they want to buy." In other words, if customers are not compelled to get their free e-mail through AOL, they won't.

In fact, according to Frankel, the 'free' movement within AOL is probably not enough to turn things around. "It smacks of a desperation move," Frankel says. "I'm guessing that they think 'If Yahoo can be totally ad supported, we can too.' AOL is just following the market, not leading it."

A better tactic would be for AOL to figure out what people want, determine what they can't get from competitors, and then deliver it, all the while exceeding expectations, says Frankel. But for any company, much less a behemoth, that's a tough row to hoe.

Accentuate The Positive
One important item to put on AOL's "to-do" list, notes InTouch's Betterly, is to rid itself of its current reputation of being difficult to deal with. "AOL is losing members, and losing the public relations battle," she says. By focusing on what AOL has done well in the past -- serving family needs -- Betterly believes the company can substantially squash its current negative image.

One instance of that is AOL Parental Controls, a free service, which covers Web site screening, report cards for parents, online timer limiting time/amount of access, and pre-approved e-mail/IM lists. In addition, the company is ramping up the KOL Channel for kids and an area called RED for teens.

"Ironically, although you'd think AOL should dump its family mentality in light of its competitors like Yahoo, the key to AOL future branding success vs. Yahoo could be to actually capitalize on its family friendliness alongside targeting the tech-savvy community currently owned by Apple," says Hecht. "AOL's core message should remain true to being family-friendly as perhaps 'the old standby' online service and the originator of online social networking, but the company messaging should certainly refocus the tech-savvy [user on the idea that] that AOL is not a 'walled-garden' or a 'gated community,' but is, rather, a gateway to the new utilitarian Internet."

Will AOL make it? Focusing on its core strengths of community and ease of use, using its video and music capabilities, and then getting the word out to users who realize they can't live without you are enormous tasks. Still, time will tell whether AOL has the stamina to get back on top, or if it will simply run out of gas.

About the Author(s)

Jennifer Bosavage

Editor In Chief, Solution Providers for Retail

Writing and editing from the IT metropolis that is Fairfield County, Conn., Jen is Editor In Chief of Solution Providers For Retail. In her role, she oversees all editorial operations of the site, including engaging VARs to share their expertise within the community. She has written for IT professionals for more than 20 years, with expertise in covering issues concerning solution providers, systems integrators, and resellers.

Jen most recently was Senior Editor at CRN. There, she was in charge of the publication's editorial research projects, including: Solution Provider 500, Fast Growth 100, Women of the Channel, and Emerging Vendors, among many others. She launched the online blog, "Channel Voices," and often wrote on career issues facing IT professionals in her blog, "One Year to a Better Career."

Jen began her tech journalism career at Electronic Buyer News, where she covered the purchasing beat. (That was so long ago that blue LEDs were big news.) Starting as copy editor, she worked her way up to Managing Editor before moving to VARBusiness. At VARBusiness, she was Executive Editor, leading a team of writers that won the prestigious Jesse Neal award for editorial excellence.

Jennifer has been married for 22 years and has two wonderful kids (even the teenager). To adults in her hometown, she is best known for her enormous Newfoundland dog; to high schoolers, for her taco nights.

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights