Programming, Packaging, Audience Segmentation Drive AOL Strategy

  • by December 19, 2004
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.

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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.

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