AOL Expands Marketing, Strategic Relationship with Philips

AOL Time Warner and the Netherlands’ Royal Philips Electronics extended
their strategic alliance Thursday, in an effort to increase awareness of
Philips’ brands in the U.S. while giving AOL greater access to Europe. The
deal has AOL agreeing to create a number of e-commerce platforms aimed at
marketing Philips’ products and services, and also has Amsterdam-based
Philips collaborating with the Internet and media titan in the development
of next generation set-top boxes.

“This relationship truly highlights the value that only AOL Time Warner can
deliver to its strategic partners,” said Bob Pittman, co-chief operating
officer of AOL Time Warner. “By expanding our relationship with Philips to
include a number of marketing and commerce assets that we now have in our
portfolio, we’re able to accomplish a number of important goals. First, we
will offer consumers more innovative products from Philips to choose from to
help make their lives easier and more convenient. Second, we will help
Philips drive growth of its business through increased brand awareness. And
finally, we will introduce consumers around the world to our online features
and services.”

The new multi-year agreement will see the two partners focusing their
collaborative efforts on a series of online, on-air and print marketing
initiatives geared at increasing worldwide awareness of both their brands.

The first aspect of the deal is an interactive marketing and integrated
media and advertising campaign under which AOL and Philips Consumer
Electronics and Domestic Appliances & Personal Care divisions will
co-develop new marketing Web sites to showcases Philips’ products and
services. A key component of the sites will be decision guides aimed at
improving consumers’ shopping experiences. The sites will also include
related content from AOL Time Warner’s Web sites. The sites will be made
available within AOL’s [email protected] destinations across several AOL brands, the
companies said.

To support the sites, they will be promoted across AOL’s media properties in
the U.S. and around the world. AOL will also promote the sites on a “wide
range” of its print and broadcast properties, including Turner Broadcast
networks properties like CNN, and Time Inc. magazines like TIME and FORTUNE.

For its part, Philips agreed to lend its distribution strength and global
reach to help AOL acquire new members.

The second aspect of the deal is a strategic supply agreement aimed at
exploring next generation set-top boxes and potential opportunities for
online interactive services integrated with television.

AOL was already using Philips, as well as Hughes Electronics, for the set-top boxes
for its AOLTV business. That business faces stiff competition from
Microsoft, which has come out with guns blazing behind iTV, with support for
its own branded UltimateTV box as well as MicrosoftTV — software which runs
the box which it is licensing to other firms. Both firms, as well as a
number of smaller players, are trying to make sure that their boxes contain
the next-generation features that will drive consumer adoption.

“This alliance fits perfectly with our ambition to build a high growth
technology company and is powerful for both Philips and AOL Time Warner,”
said Gerard Kleisterlee, chief executive officer of Philips. “By partnering
to further develop several of Philips’ key technologies, and marketing them
with and through AOL Time Warner’s brands, we can accelerate and broaden the
pipeline of new products and services to consumers to help make their lives
easier and more convenient. This alliance will extend Philips’ reach and
brand awareness in the U.S., and AOL Time Warner will have greater access in
Philips’ backyard — Europe.”

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