For America Online, the challenge in 2005 is getting millions of non-members hooked on its programming. It needs to lure them regularly and for long stretches; it will locate channels and properties where audiences overlap and analyze their movement. If the company's programming prowess, packaging, and audience segmentation strategies hit their marks, AOL could reach advertising gold. Time Warner CEO Richard Parsons told analysts nearly two weeks ago that the company's AOL division will deliver $1 billion in advertising revenue in 2004. As more marketers place their bets with online advertising and sponsorship, AOL is poised to become a beneficiary of those dollars. If it proves it can develop and effectively manage audience segments and drive millions of eyeballs to its diverse properties, it just might become a model for other interactive media companies trying to do the same thing. AOL runs some of the most frequented properties on the Web. Data from comScore Media Metrix as of November show that AOL Radio lured 7.6 million visitors, ranking No. 1 over Clear Channel; Moviefone scored 10.3 million visitors; CityGuide had 9 million; and AOL Living racked up 10 million, a gain from the 8 million it attracted in October. AOL Music, one of the company's programming success stories, ranked No. 2 in November behind Yahoo!'s Launch with 14.5 million visitors--up 4.5 million from October, according to comScore data. With sibling properties Winamp and SHOUTcast, AOL Music had 16.2 million unique visitors in November; Netscape pulled in 17 million visitors. Taken as a whole, AOL's properties attract more than 100 million people per month, which includes the company's declining base of 22 million paying members. "We have 110 million domestic consumers in our properties--it's a very wide and broad audience," says Jim Bankoff, AOL's executive vice president for programming, properties, and production. "Our goal is to attract new users into our network with compelling services--and, once in our network, we want to introduce more services," and more programming, he says. Bankoff is responsible for programming on many of the AOL properties, including Netscape, and figuring out how to appeal to multiple audience segments. Take AIM, for example. The popular instant messaging product attracts teens, young adults, and working professionals. Ads run in the AIM buddy lists; ads for movies link to the films' Web sites, promos for the WB's "Everwood," AOL house ads, and an ad for AOL's VoIP (Voice Over IP) service ran during a reporter's recent at-work AIM session. "Right now, AIM is not segmented," Bankoff concedes. "We are just catering to the majority of users, youthful and Internet-engaged." But he adds: "What we want to do is find opportunities to segment and serve multiple audiences." In fact, Bankoff says, AOL is already doing that. He cites AOL Food as an example of programming geared to female heads of household; it's packaged and served to save women time and money. The property features kitchen-tested recipes and parenting content via Time Inc. editorial, and a bill-pay product. With AOL Food, Bankoff maintains, AOL offers a unique programming-rich environment. "We're one of the few that really focuses on the female consumer who's making the purchasing decisions for her family," he says. Food attracted 2 million people in November, according to comScore. But Food is only part of the story. Women age 25 to 54 spend 34 minutes per day within AOL's Life Management Network, a patchwork of properties including AOL Food, Organizing, Parenting, RealSimple.com, CookingLight.com, InStore, and others. That's over 13 average usage days per visitor, per month or, roughly, half of the month, according to Janet Balis, senior vice president, sales development, AOL Media Networks--a position that straddles between AOL's programming and sales functions. Balis' job is to determine a marketer's objective--whether it's branding, customer retention, or lead generation--and the audience they are trying to reach. "Before, we were 'here's the product, here's the audience'--now, it is all about being focused on clients' needs. Their need is to connect with a particular consumer," Balis says. AOL is preparing for what could very well become the company's biggest gambit yet--launching AOL for non-members, planned for mid-2005. AOL.com currently functions mostly as a sales and promotion site marketing virus protection software and AOL membership (dial-up and broadband), but it also offers non-members a chance to sample programming from channels including Music, Movies, Mapquest, CityGuide, Autos, and BlackVoices. "Our goal is to enable consumers to have a place to come to experience our leading features and content, communications, and search features," Bankoff explains. "There's some exclusive features to us, some non-exclusive stuff--but it's our feeling that if consumers were presented with an option, they'll choose us." Many AOL properties are already available on the Web for non-members. "We've always had properties out on the Web," says Balis. "Moviefone, Netscape, AIM ... We've been out on the Web for a while." The difference now, she says, is that AOL is singularly focused on growing those audiences exponentially. "We expect over time, more and more consumers will say this content is interesting," Bankoff says, adding: "We want more consumer relationships in general. You can monetize them through e-commerce, search, and services." And, AOL still has some 50 million credit card relationships, according to Bankoff, which he says AOL continues to leverage with specific offers, services, and premiums.
Publishers of online business directories must include ratings, reviews, and other social networking elements to draw consumers to their sites, according to a new report of The Kelsey Group. The report, "Social Networking: Building a Better Local Online Marketplace," reveals that consumers today use social networking platforms for a variety of activities from finding referrals for services providers such as doctors or babysitters to help in buying or selling used merchandise like computers, coffee tables--even cars. "Online word of mouth is very, very powerful," said Greg Sterling, managing editor and program director of The Kelsey Group. He pointed to sites such as Craigslist and eBay, saying they prove the effectiveness of word of mouth--particularly with the 18-34 demographic, which no longer uses print newspaper classifieds as a local market reference. "Word of mouth is also the most effective source of leads for local businesses," Sterling added. Including reviews in business listings are also a good way to build consumer loyalty--provided the publishers don't attempt to manipulate consumer discussions, said Sterling. Still, while user reviews can help businesses, including them in directories presents challenges. For one thing, said Sterling, convincing consumers to take the time to share opinions can be difficult. It's a lot easier, said Sterling, to convince someone to review a movie than the local dentist. Another roadblock is that many publishers will be reluctant to add reviews or ratings, because they fear that bad reviews will alienate their advertisers. But Sterling said that online Yellow Pages publishers will have to adapt in order to meet the increased demand for unbiased user-generated review. Otherwise, he warned, Yellow Pages publishers risk losing market share to sites such as CitySearch. Some product vendors and content providers are also starting to add ratings and reviews. Online movie rental service Netflix, for example, recently added ratings and reviews to its Web site in an attempt to compete with Blockbuster Video. At the other end of the social networking spectrum are "super-communities," such as Friendster, LinkedIn, ZeroDegrees, and Tribe. The report notes that in the long term, it's unclear whether these social networking communities can sustain themselves once growth stabilizes. Sterling said the market will likely consolidate, as there are currently too many similar sites with unstable business models. One of the first examples of this consolidation happened in May, when online classifieds giant Monster Worldwide acquired online dating and networking site Tickle.com.
Online ads that use audio and video are better for branding than ads that use more static formats, according to new research from Dynamic Logic. The research reveals that a single exposure to an audio/video ad increased brand awareness by 10 percentage points over a controlled group of consumers who were not exposed to any ads. This jump is more than the increased brand awareness that comes from many exposures to different display formats. Three exposures to a large rectangle or square ad produced a 9 percent awareness increase, followed by an 8 percent increase in awareness for six exposures to a skyscraper unit, and a 6 percent lift in awareness after 10 exposures to a banner ad. Dynamic Logic calculates the brand awareness increases--called "Brand Awareness Delta"--by subtracting the exposed groups' awareness percentage by that of the controlled group. Industry professionals said it comes as no surprise that video ads have a greater branding impact than other ad units. Sarah Fay, president, Carat Interactive North America, said that clients see increases from both a branding and response perspective with rich media campaigns. But, with rich media more expensive than static ads, clients still need to figure out whether the difference in awareness is worth the extra cost. "I think that's the only thing holding back rich media formats," she said. Andrew Snyder, ESPN.com ad sales director, said that rich media ads have performed particularly well for the company's interactive on-demand video format, ESPN Motion."The strong performance of video advertising has been consistent for ESPN.com." <> The audio/video data measured 21,679 responses to 27 ad campaigns from Dynamic Logic's MarketNorms database. MarketNorms contains results for more than 1,500 online ad campaigns conducted by Dynamic Logic from over 1.7 million respondents. The aggregated results are not adjusted for demographics, ad size, Web sites, and other factors that may contribute to brand lift.
Taking its cue from Yahoo!, search engine Blinkx launched a beta version of its own video search engine--one day after Yahoo! released Yahoo! Video Search. The service, dubbed Blinkx TV, makes news, sports, and entertainment easily searchable in transcript form by capturing and indexing video and audio streams directly from TV and radio broadcasters. "Groundbreaking automatic transcription technology, which transcribes content straight from the cable box on the fly or from video already stored on the Web, together with advanced phonetic matching speech recognition technology, automate the process of searching TV clips for the first time," explained Blinkx founder Suranga Chandratillake in a statement. Users of Blinkx TV can now group specific searches using "smart folders" that continuously collect multimedia from providers like Fox News, HBO, ESPN, NPR, and the BBC World Service. Blinkx's patented context clustering technology overcomes the limitations of simple keyword methods. Chandratillake said the main difference between Blinkx TV search and other video search tools is that Blinkx TV searches satellite feeds, not just video on the Web. "Blinkx is continuing in their role as an industry prod, keeping the bigger search engines on their toes," said Gary Stein, an analyst at JupiterResearch. A reality check followed: "I doubt Blinkx would even show up on a search market-share pie chart, and I really can't imagine anyone ever telling me they just 'Blinkxed' something." The move is consistent with Internet and search companies' current interest in multimedia search. Along with Yahoo!, Google is currently recording and indexing TV programming, and Microsoft is developing a search engine for video. The predominance of broadband and the convergence of PC and TV technologies are being credited with the industries' piqued interest in video search. Would Blinkx consider selling its unique search technology if a Microsoft or Ask Jeeves came knocking? "We've grown pretty attached to our independence," replied Chandratillake. "But everyone has their price."
The Federal Trade Commission last week released new rules defining whether an e-mail is commercial under the CAN-SPAM Act, but some say the new guidelines still leave a lot of room for ambiguity. The rules, which are very similar to ones proposed in August, state that e-mail messages that contain just ads are commercial, while those that contain solely "transactional or relationship" messages--such as, for example, information about the status of an online order--will not be considered commercial. But what about e-mail messages with both commercial content and other content--either transactional or editorial? For those mixed e-mails, the decision about whether it's commercial depends in part on whether the consumer receiving the e-mails would reasonably interpret them as commercial. "It's still a standard based on the reasonable view of the recipient," said Jerry Spiegel, a partner at the New York law firm Frankfurt Kurnit Klein & Selz. "There's enough wiggle room in all of this for argument and dispute."