Time Warner Merger Means More Shoppers for AOL

America Online Inc. would gain direct access
to 26.8 million Time Warner Inc. cable
channel viewers who are already online but not current AOL (AOL) subscribers,
after the proposed merger is completed, according to a study by Cyber Dialogue.

This Time Warner (TWX)
audience is highly desirable because they spend on average more than
$2,200 on Web-related purchases per year, $300 more than typical AOL
users, the study found.

“AOL will benefit significantly from the merger if it can convert those
valuable Time Warner Cable viewers into AOL subscribers and attract their
e-commerce dollars,” said Idil Cakim, an analyst for Cyber Dialogue. “To
do this, they must develop effective marketing strategies that serve
consumers’ individual needs, both online and offline, creating a
continuous entertainment experience for their audience.”

Cyber Dialogue also found that a AOL combined with the Time Warner cable
networks are in a position to directly target 80 percent of the total
online adult population. The study’s findings herald a necessary shift in
overall marketing strategy away from the traditional mass-market approach
to that of targeting a “new audience,” seamlessly accessible via the
Internet and cable television.

Inevitably, as AOL and Time Warner cable
channels merge, Cyber Dialogue found the dynamics of their respective
audiences will shift. Consumers who are accessible through both the Net
and cable television will represent the core of the combined venture’s
customer base.

“The Internet provides the new mega-media enterprise with the opportunity
to speak directly to its audience, understand their preferences, and
target small but valuable user groups. Meanwhile, the cable network
provides a vehicle for distributing entertaining content on a mass scale,”
Cakim said.

“Following the acquisition, AOL/Time Warner will be
well-positioned to reach, communicate, and interact with its online
audience members through richer content both online and offline.”

Other Cyber Dialogue findings include:

  • AOL users who watch Time Warner cable channels are significantly more
    valuable than those AOL users who do not watch these channels ($2,105
    average online spending per year vs. $1,463)

  • Time Warner cable viewers who visit TV-related sites but don’t subscribe
    to AOL comprise a more valuable user group than both the average online
    adult and the average AOL user ($1,903 average online spending per year
    vs. $1,559 and $1,521, respectively)

  • The value of online cable viewers and their tendency to visit TV-related
    Web sites suggests that bundling content from online and offline media can
    be used to target, acquire and retain these potentially lucrative
    interactive consumers

The above findings are from Cyber Dialogue’s Cybercitizen Entertainment
Program (CCE). Cybercitizen Entertainment consists of in-depth interviews
with 1,000 Internet users and 1,000 non-users conducted quarterly.

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