September 16, 1996 2:00 PM PDT
AOL plans reincarnation
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The rollout of the "new" AOL comes on the day that the company switches from the Nasdaq market to the New York Stock Exchange. The online service hopes the switch will make its stock less volatile and pump up profits.
To kick off the switch, Pershing Financial, a service offered via AOL is offering commission-free purchases of up to 5,000 shares of AOL stock during the first week of trading.
But competition will still be stiff from other online services, ISPs, cable services such as @Home, and telephone companies expanding into the Internet market. To deal with that, the company is redefining how it presents itself.
Some highlights include:
--a huge television and print advertising campaign to raise AOL's profile in mainstream America. The slogan: "Come experience the magic."
--a mass mailing of AOL software that will initially offer free access.
--a new online shopping mall to sell $200 million in AOL t-shirts, hats, and other merchandise.
AOL, which also may get a new, more user-friendly format, will discuss plans to upgrade its network as well. The nation's number-one online service recently was stung by a 19-hour outage that it doesn't want to repeat. The added bandwidth should make dial-up access quicker and more reliable.
As reported earlier by CNET, AOL will also allow subscribers to make telephone calls to each other over its online service, and has struck a deal with the New York Stock Exchange to allow exchange members to communicate with each other as well.
AOL has kept the marketing plan under wraps, but CNET recently got a sneak peek at its plans during an interview with company president Ted Leonsis. Executives hope that the new marketing initiatives will bolster the company's profits and jump start its sagging stock price.
Despite recent drops in subscribers and revenue, Leonsis insists that the company is on the right track and will generate $2 billion in sales this year. "We've sold almost $40 million in advertising in the past 45 days, more than any other company," he said.
The company plans to become more like a network broadcast station that will "cancel new shows and bring in new shows" regularly, according to Leonsis. "I've long believed that AOL has the opportunity to become the fifth network, like ABC, NBC, CBS, and Fox."
Leonsis also compared AOL to major daily newspapers and boasted that more people logged on to the service than watched CNN one recent night.
"Today, America Online is larger than USA Today, Wall Street Journal, New York Times, Washington Post, and the San Francisco Examiner combined," he said. "Last night, I'm pleased to say that more people between 9 and 10 o'clock logged on to America Online than watched Larry King."
Creating a brand name as ubiquitous as MTV, Coke, or Nike is the ultimate goal of the company, which plans to target more of mainstream America. "Brand management is becoming more and more important for us, especially as we move from being an online service to this interactive services media company," Leonsis said.
A huge marketing campaign also is about to take off. AOL disks have been scarce over the last few months because summer is the worst time to kick off an advertising campaign, but Leonsis said that will soon change.
Starting this month, millions of disks will start to pour in to American mailboxes. "Trust me, shortage of disks, and name awareness of AOL won't be an issue in 30 days," Leonsis said. "People always look at us like we don't know what we're doing, and I say, 'Excuse me, we're the size of Houston right now.'"
The company will also run a major television ad campaign to reach the 89 percent of Americans that are not yet online, Leonsis said. The slogan says: "Now it's the time, come experience the magic and see what you can do."