Media Analysis: AOL turns to web's darker side

The drive, which was unveiled at the start of this year and is being
backed by a £15m spend in the first quarter alone, is intended to
encourage consumers to see AOL in a different light as it attempts to
banish perceptions of being 'too American' and the 'safe option'.

The ads, created by Grey London, use the strapline 'What do you think?'
Running across TV, outdoor, press, cinema and online, the work is part
of a broader brand overhaul that AOL hopes will help attract a new type
of consumer over the next 18 months.

Points highlighted in the campaign include the problem of online
paedophilia and, as a counterpoint, the internet's role in raising money
after the tsunami disaster - the ads reveal that the total donated via
the web was more than that pledged by national governments. The activity
will be backed by the launch of a blog encouraging consumers to discuss
their views about the internet.

The campaign is the polar opposite of AOL's previous brand strategy,
which until last year relied on its anodyne brand character, Connie, to
demonstrate its family values.

Facing the issues

Broadband is growing faster than ever, and nearly 60% of the UK is
connected to the internet via broadband, according to the Office for
National Statistics. In light of this, AOL is aiming to differentiate
itself from the competition by not positioning solely on speed and
price, says chief marketing officer Tobin Ireland.

'We have seen a massive focus on price and speed, but not on some of the
serious issues raised by the internet,' he says. 'There is a substantial
debate about the internet's impact on people's lives, which is being
missed.'

The strategy is risky. Highlighting the internet's downside by flagging
up issues such as paedophilia and identity thefts, both of which the
industry has tried to disassociate itself from, could alienate AOL's
core market, which has remained loyal to the company precisely because
of its positioning as the safe option.

Ian Fogg, senior analyst for Jupiter Research, says the shift in
approach is proof that AOL needs to widen its customer base. It has 1m
broadband customers, according to Jupiter, which is less than half of
market leader BT's.

'Traditionally, AOL has always focused on safety and the family, but
this shows it is keen to prove it can offer something different from,
and more innovative than, the other ISPs,' says Fogg.

He adds that by focusing away from its rivals' preoccupation with price,
AOL might be losing out in the customer stakes in the short term, but
the strategy may soon pay off.

'It has resisted going in at the cheapest end of the market and relied
on its strong brand in what is a very fragmented market. In the long
term, this must be a good thing, as its customers are less price-focused
and therefore likely to stay with AOL for longer,' he explains.

Ireland admits there is a need to broaden AOL's appeal, but insists that
heavyweight activity is not a desperate bid for more customers. Instead,
he says, it is a bid to establish a 'long-term brand platform, from
which we can promote a host of content and access services'.

The launch of this brand platform not only coincides with a strong
growth period for UK ISPs, it also comes as the boundary between
communications and content becomes blurred, with firms on both sides
seeking to expand.

Examples of this include Sky's recent acquisition of broadband company
Easynet, as a precursor to establishing its own broadband division, and
BT's impending launch of a broadband on-demand TV service early next
year.

Service expansion

Like most major players, AOL has tried to capitalise on the
broadband-content revolution by offering a range of video-based services
to its members and moving into telephony.

In the US, meanwhile, it has opened up several of its communications and
content services to non-members for the first time, with a similar
portal expected to launch in Europe next year.

In theory, AOL is well-placed to take advantage because, as part of the
Time Warner media group, it has an inventory of global media brands at
its disposal. But with rivals brokering powerful alliances, and
competition in the ISP market at its toughest since the narrowband
frenzy of 2000, AOL has a tough fight ahead, according to industry
watchers.

To bolster its position, AOL recently announced a lucrative partnership
with Google, under which the search giant will invest $1bn
(£600m) in the ISP in return for a 5% stake of the company.

The deal, regarded as a major coup for AOL, will see the two companies
work closely on content and search. It will also boost AOL's plans to
become a destination portal for both subscribers and non-subscribers, as
the two companies will cross-promote each other.

AOL's key challenge is to prove to consumers that it can be much more
than the safe option by providing a range of access and content.

The campaign is being viewed as a significant move in broadening its
target audience, but in the long term it may take much more to change
public perceptions of the brand.

DATA FILE - UK BROADBAND SUBSCRIBERS

Company Brands Subscribers
1 BT Retail BT Yahoo!/BT Broadband 2,111,000
2 NTL NTL Home/Virgin 1,720,600
3 AOL AOL 1,000,000*
4 Telewest Blueyonder 920,186
5 France Telecom Wanadoo 826,000
6 Tiscali Tiscali 764,000
7 Pipex Nildram/Pipex/Freedom2Surf 240,000

Source: Jupiter Research *estimated
Note: figures are for the third quarter of 2005