RealTime IT News

AOL Welcomes Ads to Front Page

AOL has begun to offer advertisers space on its front page, an area previously off limits to ads, as it deals with the aftermath of its ad-sales meltdown.

AOL Time Warner's woebegone Internet unit has lifted its previous taboo on "Welcome Screen" ads in an effort to lure back advertisers, who have fled the company in droves. AOL's ad revenue fell 40 percent last year, and the company expects it will fall an additional 40 to 50 percent this year.

For the past couple of weeks, AOL has experimented with a Welcome Screen ad that takes up about 10 percent of the screen. The Internet service will roll out the front-page ad regularly next month, relocating it from the center of the screen to the lower right-hand corner -- what AOL hopes will become high-priced real estate for advertisers.

"Advertisers have been clamoring for the Welcome Screen for years," said Ruth Sarfaty, an AOL spokesperson. "AOL has been reluctant to hand it over because of the fear that it would infringe on members' experience. The general feeling is that it can be done without infringement and could enhance the experience."

WeightWatchers.com and Dell were among the first advertisers to test the Welcome Screen ad. Sarfaty said AOL would not accept ads for certain products, such as liquor and cigarettes.

Recently, Yahoo! CEO Terry Semel reported that Yahoo!'s prominent front-page ad unit had become very popular with advertisers looking for a wide reach for their message, helping to drive the company's impressive ad-sales results.

In addition to the front-page ads, AOL is rolling out a number of added marketing options. Advertisers can now take out ads on the main pages of the service's channels. AOL also hopes to tap further into the hot search market by selling graphic ads on its search pages based on what members search for using the service's Google algorithmic search. AOL's search pages already display paid listings from Google's AdWords services.

The front-page ads can use rich media, too, using AOL's proprietary Rainman system. AOL has lagged behind rivals like Yahoo! and MSN in the move to rich media. This was due, in part, to AOL's Rainman, a home-brewed service on which AOL's pages are based, being unable to support many types of Web animation.

Last August, AOL began a road show to push its buffed-up rich-media capabilities to advertisers.

However, intrusive front-screen ads present a challenge for AOL, which has redoubled its efforts to keep the user experience a priority. Along those lines, the company announced in its October 2002 launch of AOL 8.0 that the service would no longer carry third-party pop-up advertisements.

Despite trumpeting the move as a response to its members annoyance with the vilified ad format, AOL has continued to serve pop-up and pop-under advertisements for AOL Time Warner's vast stable of properties a fact rival ISP EarthLink has made hay out of. EarthLink, which started releasing pop-up blocking software to its members last August, ran an ad campaign last year questioning AOL's anti-pop-up credentials. EarthLink points out that AOL still serves million of pop-ups for AOL Time Warner properties.

Keeping subscribers happy is key to AOL chief Jonathan Miller's turnaround strategy. However, AOL has been plagued by its reliance on a dialup base for its 35 million customers worldwide. In the fourth quarter, the company reported that its subscriber base shrank for the first time; it lost 176,000 customers during the normally robust holiday season.

AOL attributed the decline to a number of customers ending trial offers, with AOL looking to retain customers that actually contribute revenue.

AOL's trouble keeping narrowband customers follows that reported by Microsoft for its MSN service, which said its subscriber base remained stagnant since introducing MSN 8 three months ago. The company attributed the sluggishness to declining interest in dialup Internet connections.

AOL's high-speed offering is still in its early stages of rollout, with the company reporting just 600,000 broadband customers.