Another big brand is jumping in the Free is good for our marketing syndrome. Time Warner (TWX) just announced yesterday that AOL will offer its e-mail and web services for free. The goal is to move heavily to a pure advertising revenue and stop the subscribers churn: they’ve been loosing 30% of their 26.7 million U.S. customers from Sept 2002, now down to 18.6 million. AOL expects to save more than $1B in marketing costs by the end of 2007 in doing so, placing their bet on the recent surge of advertising revenue – 40% up in one year to $449M. AOL is also risking its dial-up subscribers business, representing 80% of their income, which was $2B in the last quarter alone.
What are they doing to retain these customers?
Given the impressive churn rate AOL is suffering, I asked myself if AOL was not getting Dell’d as well. Not to mention of course that dial-up Internet access is not geared to expand in the future but they offer high-speed access.
Well, you know me by now, me writing this post is a strong indication that the answer is probably close to a YES. Here is an interesting experience of Vinny trying to cancel his AOL dial-up account. Do yourself a favor and have a good smile on your face, listen to Vinny’s recorded phone conversation with the AOL representative when trying to cancel. It is just amazing. The Consumerist then posted the apparently real AOL retention manual, a strong indication that what Vinnie recorded is not at all isolated. And of course bloggers started to buzz about it.
What is AOL answer to this negative buzz: FREE. We will give you more for free so you don’t go away or even better, you’ll subscribe to AOL as your boradband ISP.
Once the Internet king and now stumbling, AOL is to me a very good candidate to get Dell’d. I’d be curious to read about your Get Dell’d brand candidate list and stories about it. Feel free to post it here.
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As a follow up to this post yesterday, AOL is just sending another signal to his customers and stock holders: “massive layoffs are expected as AOL stops actively marketing its dial-up services in the United States and reduces its need for customer-support centers.” < HREF="http://news.yahoo.com/news?tmpl=story&cid=562&e=1&u=/ap/20060803/ap_on_hi_te/aol_layoffs" REL="nofollow">reports<> Associated Press.>>That’s a strange way to improve its customer service. The rationale behind it seems to be that needs for live customer service will decrease as it’s not free, explains AP. The Free offer is expected to drive more customers to cancel their paid subscription to move to the free services, leading to more “Vinnie’s” experience. Stay tuned…