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AOL Planning Move to Ad-Supported Model
garzpacho writes "In recognition of the fact that its subscriber-based revenues continue to plummet, AOL is planning to shift to an ad-supported business model. AOL's subscriber base, which peaked at 30 million users, now has less than 19 million subscribers and is still dropping — over 800,000 subscribers dropped the service in this year's first quarter alone. In addition to seeing fewer AOL CDs, a shift to ad revenue also means some serious cuts in staff size, especially in the customer service and retention departments. From the article: 'Time Warner plans to announce a series of changes at AOL that analysts say will mark the end of the company's paid-subscriber model. The company will begin relying on advertising sales rather than monthly fees paid by customers, according to the Wall Street Journal. 'I don't know whether advertising will work, but my thinking is (the changes) are basically an acceptance of what is happening,' says Joseph Bonner, a media and telecommunications analyst at Argus Research. 'This is a reflection of reality, that they have to find some other source of revenue.''"
It seems to me that AOL is looking at the search engine model and trying to copy it. The only problem is that AOL has absolutely nothing to "draw" people in the way google does. It's kind of backwards actually. AOL continues to offer bloatware, horrible customer service, a poor product, and is now going to try adding advertisement into the deal to save itself. Google offers a top notch search engine with innovative product that makes people WANT to come, and now they are looking at offering broadband and becoming their own ISP..... AOL needs to fix it's business model and offer something compelling. If you're not drawing people advertisements won't do much.
It's over AOL, the days of dialup are gone and people will eventually be using DSL or Cable provided by their locality. I for one am impressed that AOL even exists. I mean seriously, who uses AOL?
http://religiousfreaks.com/How deep does the banner advertising market go? I can't imagine that there is that much advertising-per-desktop to go around, with adwords already out there thriving. In simple supply/demand terms, instead of subscribers bolting, you will see cost per click plummet.
Dammit Otto, you have lupus.
So, basically, people fed up with getting abused by their paltry customer service quit, and they lose money. To solve the problem, they shift to ad based revenue, cutting retention and service, pissing off even more people via the further reduced service who then quit, allowing them to shift to even more ad-based revenue.
It's brilliant I say! Brilliant! They've perfected some sort of perpetual money machine here!
Here's my prediction of what is going to happen:
Everybody who is dumb enough to use AOL keeps using it, but doesn't pay.
The true cheapskates of the world sign-up, but since they are cheapskates, the advertising really isn't going to work on them very well. Advertisers abandon AOL.
AOL ends up dying. Thank God.
Not that I have ever used AOL, but unfortunately some family memebers I support do... and their number one complaint is that "my internet is so slow". So now they will get double slammed with ads, AOL's and whatever webpage they decide to look at. I'm sure they will be thrilled.
I have a better idea for AOL. Make your service something people actually want. Make it fast, make it simple, make it cheap, and most of all make it about the customer rather than your thinning wallets. I would have no problem suggesting AOL to anyone if AOL was all of these things. Hell I might even encourage people to pay a couple of bucks more a month if it meant fewer phone calls to me.
Unfortunately, most of the phone calls I get from AOL users are because of AOL. Throw more ads into the mix and I bet the number of people leaving increases rather than decreases. People aren't leaving AOL because of cost, it's because of better alternatives. If AOL had made their service better, treated their customers with some respect, and gave them what they needed people who wanted a simple way to get on the net would have flocked to them. Instead they gave them the opposite and are only gonna make it worse by adding ads to the mix of things they are doing wrong.
Sometimes the best solution is to stop wasting time looking for an easy solution.
They still run on telephone modem due to restrictions imposed by the FTC from the TW/AOL merger - AOL cannot use TW's cable resources unless TW opens their pipes to competitors (which they have refused to do).
No geek of any stature would even think of subscribing to AOL and there is a uncomplimentory generalization of AOL members when they post to a forum.
AOL's solution to the spam problem is a whitelist which you have to pay a fee to send mail to.
If you send an email to an AOL account that is dead, you don't get a bounce so you have no feedback if your friend received it. Over time people stop bothering to email to any AOL account.
There are better alternatives to AIM and it has no place in the office. TW tried to make AIM the corporate messaging standard and it failed miserably.
AOL is on the blacklist at corporation IT departments. AOL software takes over your PC and requires a complete reinstall to remove it, which is not a favorite pasttime of IT.
AOL does everything possible to keep their members in their "walled garden" - you cannot even change the home page in the AOL browser, it is fixed at AOL dot com.
There is a growing backlash against aggressive mass marketing and people are getting tired of AOL junk mail CDs landing in their mailbox.
AOL goes to great lengths to prevent members from unsubscribing. Frustrated customers will tell all there friends to stay away from AOL. That's not how you build loyalty.
Someone please tell me how a shift to advertising revenue model is going to solve all this.
Eternity: will that be smoking, or non-smoking? I Corinthians 6:9-10
Dwindling user base? Here's the cure.
Flood them with mandatory advertising through your connection client. I'm sure that lots of modem using people are going to be double-plus happy waiting all that extra time downloading megabytes of extra rich shockwave advertising content at 56k, and then wading through it all just to get their email. Freaking brilliant.
Weaselmancer
rediculous.
Comment removed based on user account deletion
There's no way we're going to keep uncle Homer and aunt Ginny off the web, and no real reason to want to. I can't remember the last time a search engine returned a page of someone's blurry photos of their cat. What we need is a way for them to access the web without our help! AOL used to provide that, and could again, if they'd get their heads out of their assets.
Sure, they've lost a ton of subscribers, but their membership is still equal to the populations of the five largest US cities, combined. Who uses AOL? You're kidding, right? Stop playing with your own ROOT long enough to get a clue about your neighbors. Everyone has DSL or Cable? Dream on. There are still plenty of people who don't have access to either, and plenty more who can't or won't spend that much on internet access. That $40 or $50 a month may be nothing to a highly paid techie, but it's a ridiculous chunk of money for someone scraping by on average pay when they can get 90% of the functionality for 40% off the cost. Dialup access is essentially free for most people, aside from the ISP charges.
I've recently had a real-world refresher course in what it's like to deal with dialup and dialup providers and, trust me, as bad as AOL may be, they're still better than the alternatives. Ever called an ISP's tech support and gotten connected to Bubba, whose six kids are all screaming over the blaring TV in the background, while he thumbs through the manual trying to find you an answer? I have. Apparently telecommuting has reached the sticks, even if broadband hasn't. Compared to that, AOL's support is a dream come true.
What AOL really needs to do is not pack more ads into less screen real estate, but get back to their roots. They dominated the ISP business by making it simple to connect, period. The content was always crap. Chatrooms have been supplanted by IMs. No one needs their guidance to find what they're looking for; all they need is Google.
The anti-virus and firewall apps are actually a good idea for the technophobes out there, who otherwise would probably be totally unprotected, but should definitely be optional. (I thought they were, but I could be wrong.) But they should dump the rest of the crap, and just do what they used to do best; make connecting simple and non-threatening for those who just want to turn it on, like a TV, and not have to worry about how it works.
They're not losing customers because of the content. They're losing them because they've lost sight of who their customer base is.
Yes, because nothing helps keep a customer more then poor customer service and a lack of people trained to keep the customers. Then again, I do remember their tactics "Oh stay, here let us give you 6 months free." Six months later "Oh stay, here let us give you 6 months free." Followed by someone saying "I noticed on january you accessed this much, and on February that much" - which really makes me you know happy.
AOL just has a rep, and not a great rep. Nobody wants their crappy interface anymore which is bloatware.
I mod down so you can mod up. Your welcome.
I could get fired for this but here goes:
I'm one of those evil AOL "retention" agents except I'm not an idiot like the guy in the recording you all heard a few weeks ago. It is astounding how things have changed here at the AOL call center since the incident with the cancellation call recording being on the Today Show. A few weeks ago they would fire you for not hammering the hell out of these people calling to cancel. They expected us to "save" every single caller and lying was acceptible and encouraged (as long as the lie cheated the customer and not AOL). Now they fire you for making more than one very polite saves attempt or being the slightest bit rude to the caller. Call volume is way down and rumors are rampant that the center will be closed. The management assholes in this place who have been running the money-machine scam for years have definitely had the smugness wiped off their faces.
Having said all that, if you know someone like your grandmother or your kid sister who likes AOL and wants to keep it here's how to get it free over broadband or for $9.95/month unlimited dialup - Just call and request to cancel. Just say they you've gone to broadband and you want to cancel and they will give you free version. If you want the dialup version request to cancel giving the reason that it's too expensive and you want to go to a low cost provider. They will offer you $9.95 unlimited dialup no commitment. But you have to say you want to cancel or you won't be offered these deals.
Tell anyone thinking of tying AOL to beware of the "Risk Free Trial" disks. Risk Free Trial really means money back guarantee (it's not the slightest bit clear on the packaging) and the payment method will be hit for $25.90 on the day after creating the account. These risk free CDs are making checking accounts go overdrawn by the tens of thousands because the dipshits running them don't have an extra $25.90 to cover the unexpected charge. The typical AOL customer nowdays is either old or poor or an immigrant and most of them don't have much money. If you want to make a AOL account call AOL and make them give you a free trial and then cancel it to get the free broadband account or the $9.95 dialup.