America Online, Inc.

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America Online, Inc.

AOL LATINO CAMPAIGN
WELCOME TO THE WORLD WIDE WOW CAMPAIGN

22000 AOL Way
Dulles, Virginia 20166
USA
Telephone: (703) 265-1000
Fax: (703) 265-1101
Web site: www.corp.aol.com

AOL LATINO CAMPAIGN

OVERVIEW

America Online, Inc. (AOL) emerged in the 1990s as the largest Internet service provider (ISP) in the United States, a feat it accomplished in large measure through the mass distribution of start-up CD-ROMs and free trials. Many of its customers were families and people new to the Internet who were won over by AOL's claims that it was easy to use. By the early 2000s, however, AOL's strong growth came to an end, and it began to lose subscribers to cheaper dial-up ISPs as well more expensive but much faster broadband providers. On its rise to the top AOL had netted a great deal of Hispanic customers, and as a matter of course AOL became the leading portal for Hispanics. They were an alluring demographic—fast growing, family oriented, and cost conscious—making them an ideal source to replace the dial-up customers that AOL was losing at an alarming rate. To better attract and serve this market, AOL launched a Spanish-language portal called AOL Latino in September 2001. While AOL reached out to the Latino market with Spanish-language advertising, the commercials were merely translated versions of material developed for the general population. In 2003 AOL finally hired an Hispanic advertising agency, Casanova Pendrill Publicidad, Inc., and released an advertising campaign that was specifically developed for the Hispanic market.

The AOL Latino campaign, the budget of which was not made public, unfolded in waves and included television, radio, print, outdoor, and Internet elements. The early TV spots highlighted AOL features that were popular with Hispanics: music downloads, education support, and instant messaging. Later the campaign emphasized the theme of empowerment, stressing the idea that having the Internet in the home was important in the educational development of children.

AOL was pleased with the results of its Latino campaign. Although the company did not reveal subscriber gains, the campaign clearly solidified AOL Latino's position as the number one Spanish-language ISP. Furthermore, it helped mitigate AOL's continuing loss of general-population subscribers.

HISTORICAL CONTEXT

The precursor of AOL was Q-Link, an online service established in 1985 for owners of Commodore personal computers. The company that operated it, Quantum Computer Services, changed its name to America Online in 1991. With the advent of the World Wide Web in the 1990s, an increasing number of people bought personal computers to take advantage of the Internet. AOL vied with two other early online entrants, CompuServe and Prodigy, to become the market leader among Internet service providers (ISPs). AOL was relentless in its efforts to distribute start-up CD-ROMs and enticed new subscribers with free trials of its service. AOL was successful in selling itself to parents who wanted to maintain limits on content for their children; it also attracted customers who were simply new to the Internet and preferred more guidance than was available with other services. In 1997 AOL became America's largest online service, boasting 8 million subscribers, a number that would double just a year later.

During its rise to the top AOL attracted a large number of Hispanics. It was not until September 2001, however, that it launched AOL Latino to cater specifically to the Spanish-speaking market. In July 2002 the company established a U.S. Hispanic interactive-marketing unit. By this time AOL had merged with Time Warner, creating the largest media company in the world, and the online unit came under increasing pressure as the subscriber base, which had reached about 25 million in the United States, began to erode. AOL was losing out on one end to cheaper dial-up services and on the other end to providers of faster high-speed Internet connections. As a result it began to view the Hispanic market as an important source for replenishing its pool of customers. In January 2003 Advertising Age reported, "2.5 million Hispanic households [were] likely to go online for the first time in 2003, and … those new to the Internet [were] increasingly Spanish-dominant." In January 2003 Casanova Pendrill Publicidad, an ad agency that was part of Interpublic Group and was based in Irvine, California, was awarded AOL's Hispanic advertising account. In May of that year AOL released its first-ever comprehensive campaign targeting Hispanics, both to reinforce its position as the top ISP for Spanish-speaking Americans and to attract new business. Prior efforts were simply Spanish-language versions of advertising created for mass audiences.

TARGET MARKET

In 2000 the Hispanic population in the United States numbered more than 40 million, or about 13 percent of the overall population. It not only was the largest minority group in the country but also was growing at a fast clip: about 5 percent each year, four times faster than the general public. Thus, according to the U.S. Census Bureau, by 2010 there were expected to be 50 million Hispanics in the United States, making them an increasingly inviting opportunity for marketers of all stripes. The AOL Latino campaign targeted bilingual and Spanish-dominant speakers who either planned to switch ISPs or intended to begin using an ISP in the next 6 to 12 months. Within that group AOL looked to appeal to families, as it did with the general population. Mary Ann Donaghy, AOL's executive director of marketing strategy and new-product development, explained to Advertising Age, "Hispanic Internet users tend to be younger than other users, are more likely to use instant messaging and to download music and videos, and spend more if they shop online, especially on music and DVDs." Therefore they were an ideal audience for AOL's product-enhancements pitch, which addressed these activities.

CORPORATE LOVE

America Online, introduced by Stephen M. Case in 1985 as a small dial-up Internet service called Q-Link, evolved into a media powerhouse 15 years later. In 1999 it acquired the companies Netscape Communications (known for its Web browser), MovieFone (a ticketing service), and two major Internet music providers: Spinner Networks and Nullsoft. A year later it added the mapping-services company MapQuest, and in 2001 it merged with Time Warner in a $183 billion deal that created the largest media company in the world. Case was named chairman of the new behemoth.

COMPETITION

In appealing to the Hispanic market AOL faced much of the same competition as it did with the general population, because many in the target demographic were bilingual and might easily choose an English-language Web interface over a Spanish-language one. Hispanics tended to be very price sensitive, so they generally opted for dial-up connections. Thus, AOL had to contend with cheaper dial-up ISPs, such as Earthlink, the NetZero and Juno brands of United Online, Yahoo!, lesser-known brands such as Copper and Toast.net, and local ISPs. In the broadband category AOL competed against telephone companies offering DSL service and cable TV operators offering cable-modem service, which was even faster than DSL. An increasing number of consumers opted for a high-speed connection, foregoing AOL's offer of premium content at an additional cost. AOL also had to contend with small Spanish-language ISPs—such as Pasito.com, which teamed up with the popular Hispanic portal Para—and a more formidable challenge from Microsoft's MSN, which in 2001 bought Yupi Internet, a Spanish-language Internet portal. Although it faced a lot of competition for the business of Hispanics, AOL was the unchallenged market leader.

MARKETING STRATEGY

The AOL Latino campaign, estimated to be budgeted at $10 million, broke in May 2003 and included television, radio, and print elements. The focus was on music downloads, education support, and instant messaging, features that Hispanic consumers used more than the general population. Writing for Adweek Online, Ann M. Mack reported that the two initial 30-second television spots played on "the themes of family, friends and education, and emphasize[d] AOL features that are appealing to Hispanics, such as entertainment and the ability to communicate with people domestically and abroad via the Web." The spots relied on the tagline "Get closer to your world"; one showed a boy clicking a mouse to explore a botanical garden online, and another showed a girl clicking on a link to listen to the words of Abraham Lincoln. The spots ran on the popular Spanish-language television channels Univision, Telefutura, and Galavision in several of the top-10 Spanish-speaking markets, including Chicago, Miami, New York, and Los Angeles. They were aired again in July 2003. A print component of the campaign also began in May, and radio spots were unveiled in July.

A second phase of the AOL Latino campaign began in November 2003 and included television, radio, print, and outdoor advertising. Three of the television spots featured AOL's Running Man icon. For example, the spot titled "School" depicted the character in a classroom. While writing in Spanish on a blackboard, a teacher heard a disruption and turned around to ask, "Who's passing notes?" ("Notes" in Spanish translated as "messages," thus drawing a connection to AOL's instant-messaging feature.) The children in the room then pointed to an unlikely student, the Running Man, AOL's icon for instant messaging, who looked away in an attempt to appear innocent. The spot closed with him dashing out as class was dismissed, with a voice-over commenting, "America Online learned Spanish … introducing the new AOL Latino." Writing for Adweek, Rebecca Flass explained, "In showing Running Man learning Spanish, AOL is hoping to convey that it now speaks the language of Latinos." The second Running Man spot, "Housekeeper," featured a mother apparently interviewing an unseen person as a housekeeper, asking how the person intended to protect the kids. The punch line of the spot was the revelation that the woman had been addressing the Running Man and talking about AOL and its parental-control features. The third spot, titled "Love," followed the same pattern, this time with a man in a cubicle talking to someone offscreen, presumably a lover. "Finally we understand each other," he said. "We're talking the same language." Once again the Running Man was revealed as the silent partner. The tagline for these spots was "Acércate a tu mundo" (Get closer to your world).

Other television spots in this phase of the campaign were 30-second vignettes that, according to company literature, were "meant to supply tips to users that address offerings like homework help, instant messaging, and parental controls." The campaign's radio spots, featured on the 66 stations of Univision Radio, focused on Hispanic families' affinity for Spanish even when communicating online. Billboard ads were placed in the top 10 Hispanic markets, print ads appeared in leading Spanish-language magazines, and Spanish advertising was run on websites. In addition, AOL began an aggressive distribution of CDs containing AOL Latino 9.0 Optimizado (the Spanish version of the new version of AOL, AOL 9.0 Optimized) through direct mail.

In June 2004 AOL began a final campaign phase that ran through the end of the year. The advertising shifted its focus to the theme of empowerment; this idea was based on market research showing that 70 percent of Hispanics believed that having an Internet connection in the home increased a child's performance in school, thus giving them a better chance to go to college and ultimately land a good job. The first television spot in this series, titled "The Talk," showed a young boy asking his parents why the family did not have Internet access at home. The spot then showcased AOL Latino's educational features, such as bilingual homework help. The father then brought home a computer with access to AOL Latino; the family began to experience the Internet, and the spot closed with the boy bringing home an excellent report card.

AOL also introduced a pair of supporting programs. One, the "Sign On a Friend" promotion, paid a $50 bounty to an existing member when he or she referred a friend to AOL Latino. The other was the introduction of the AOL Optimized PC, a personal computer priced at $299.99 with a one-year AOL membership commitment of $23.90 a month; it was available at Office Depot stores and other retailers. In addition to a computer and a printer, the system came bundled with a suite of software that included word-processing and spreadsheet applications. Although the PCs were made available to all consumers, they were especially suited to cost-conscious Hispanic families and could be purchased preloaded with AOL Latino service. Moreover, the PCs could easily switch from Spanish to English to accommodate bilingual consumers and families with members who preferred one language over the other.

OUTCOME

AOL continued to experience serious erosion in its overall number of U.S. subscribers and subscriber revenues, losing out to high-speed providers as well as less-expensive dial-up ISPs, but AOL Latino was able to make gains with the Hispanic population to offset losses in the general public. The campaign succeeded in doubling normal call volume to AOL member-services centers, as the target audience embraced the opportunity to receive more information about a free trial. The company did not reveal the exact number of Hispanics it added to its customer base other than to say that AOL Latino "significantly increased memberships." Focus groups and other research, according to the company, also showed that the campaign was well received by the target audience.

WELCOME TO THE WORLD WIDE WOW CAMPAIGN

OVERVIEW

America Online, Inc. (AOL) used a strategy of mass distribution of start-up CD-ROMs and free trials along with unsophisticated late-night television spots to become the largest Internet service provider (ISP) by 1997. Because it relied on dial-up service, AOL faced a major challenge with the advent of broadband (high-speed) Internet access provided by telephone and cable TV companies. Moreover, AOL joined forces with Time Warner in a celebrated 2001 merger, creating a media giant. Expectations for performance were heightened, but AOL found the business landscape shifting and began to lose subscribers, both to cheaper dial-up ISPs and faster broadband service providers. AOL, pigeonholed as a dial-up ISP in the minds of consumers, attempted to become a broadband provider but soon abandoned that strategy. Instead it decided to reposition itself as a premium-content provider—an add-on service for people acquiring broadband connections from other sources. In an effort to rebrand itself and pitch the broadband package, in January 2003 AOL hired Len Short, formerly of Charles Schwab & Co., to serve as chief of brand marketing. Short recruited a new ad agency, BBDO New York, to develop a campaign to sell AOL Broadband.

In March 2003 AOL unveiled a $35 million, two-month campaign with a new tagline, "Welcome to the World Wide Wow." Unlike previous efforts, the new AOL television spots possessed all the glitz expected from a Madison Avenue advertising agency. They aired during prime time rather than being relegated to cheap late-night slots. The campaign also included an online blitz that saturated the Web with ads touting AOL Broadband. The television spot that received the most attention featured movie star Sharon Stone in a nightgown in bed, a life-size version of the AOL running-man icon, and a bit of double entendre.

The campaign's "World Wide Wow" tagline was questioned by critics, and the Sharon Stone spot was singled out for vituperation. While Short maintained that he was pleased with the campaign and insisted that it had met its intended goals, his words were belied by his actions. He asked for new ideas from ad agencies, and a few months later AOL trotted out a new approach and a fresh tagline. Despite the changes, AOL continued to lose subscribers and failed to win many converts to its broadband service. By February 2004 Short had left the company, and AOL reverted to its previous marketing strategy.

HISTORICAL CONTEXT

America Online, an early participant in the Internet revolution, had by 1997 emerged as the leading Internet service provider (ISP), relying mostly on the mass mailing and distribution of program CD-ROMs and free trials. Beyond that, the company's marketing was a ragtag affair that included buying television time on the cheap and airing crude spots late at night; it possessed no coordination and achieved little impact. Adweek critic Barbara Lippert described AOL commercials as "cheap-looking, numbed-out affairs featuring an array of smiley, zomboid converts at their keyboards, spouting lines stiffer than the ubiquitous sign-up discs." The tagline was "So easy to use, no wonder it's No. 1!" Nevertheless, AOL thrived because of it ease of use and low price, both of which appealed to the millions of consumers who began to buy their first computers and were unsure about how to navigate the new world of the Internet.

The scattershot approach worked until the 2000s. After it merged with Time Warner in 2001, creating the largest media company in the world, AOL began to see subscriber growth slow down. The market was becoming more sophisticated about computers and the Internet, as many people opted not to pay for AOL's proprietary content and to simply subscribe to a less expensive, bare-bones Internet connection. Moreover, as a dial-up service AOL was beginning to feel pressure from broadband service providers, such as telephone companies offering DSL service and cable television companies offering even faster cable-modem service. AOL launched its own broadband service, offering a connection and AOL content while touting speed and ease of use. Given that all broadband products presented the same advantages, however, AOL struggled to differentiate itself from the competition. The company then changed course, electing instead to bundle its content with broadband carriers at an extra charge to consumers. The add-on service included more video clips, better parental controls to keep children within the confines of the AOL site, virus protection, and a block on pop-up advertising.

To support the broadband service and meet challenges in the marketplace, AOL hired a new brand marketing head, Len Short, formerly with Charles Schwab & Co. In early 2003, after just one week on the job, he fired the company's advertising agency, Gotham, which had held the account since 1997 and had not impressed Short with its approach to selling AOL Broadband. He then asked other agencies to pitch ideas for a broad $150 million campaign to rebrand AOL, but it quickly became apparent that the crux of the rebranding effort would be promoting the broadband service, and that $35 million job was given to BBDO New York. According to Julia Angwin, writing for the Wall Street Journal in March 2003, "The stakes are high. The AOL Time Warner unit is under fierce pressure to show results by the end of this year, or face the possibility of being spun off or sold."

TARGET MARKET

In general AOL appealed to the family market. The service was not only easy to use for all age levels but also provided parents with a measure of control, preventing children—especially AOL's large base of teenage customers—from being inadvertently exposed to the seamier side of the Internet. The company also touted the service's ease of use for people new to home computing and first-time users of the Internet, those in need of "training wheels."

The broadband campaign targeted a narrower subset of the family market: people with enough disposable income to upgrade from dial-up Internet service to a high-speed connection, costing $40 to $50 per month, and who were also willing to pay an additional premium, $14.95 ($9.95 for AOL subscribers), to receive the AOL interface and content. A major part of the campaign involved Internet marketing, which would inundate the Web with advertising urging current broadband users to subscribe to AOL's content. But the campaign's top priority, according to the Wall Street Journal's Angwin, was "to convince its 35 million subscribers to keep their America Online service when they upgraded to a high-speed Internet connection."

COMPETITION

Although AOL viewed itself as a step up from Internet service providers (ISPs), which merely offered a connection, it still faced stiff competition from dial-up ISPs such as Earthlink and United Online (created by the 2001 merger of ISPs NetZero and Juno). These providers offered accelerators to boost dial-up Internet speeds. To compete on this end of the market, AOL added its own speed-enhancing upgrades. The company also received competition from telephone companies offering DSL service and from cable TV operators with their cable modems. By no longer offering broadband connections and repositioning itself as an add-on service, AOL skirted direct competition and formed partnerships with many of these broadband providers, making AOL available to their customers at an extra charge.

Nevertheless, many of these broadband customers would be content with a bare high-speed connection and would therefore forego AOL's exclusive content and added features. Moreover, customers could increasingly turn to other sources for the types of services that AOL offered; as Angwin reported in the Wall Street Journal, "cable and phone companies … are adding snazzier features to their broadband services." To make the landscape even more competitive, Internet portals such as Yahoo and Microsoft's MSN also added virus protection and pop-up blockers and teamed up with telephone companies to offer high-speed Internet connections at a lower price than broadband plus AOL. In an interview with Catharine P. Taylor of Adweek, Short said that AOL Broadband's competition was essentially "everybody," adding, "But in some ways, we don't have competition, because our product is fundamentally compatible with all the connection providers, and we have proprietary content. However, at this early stage of broadband, some people are making a decision between us and another broadband provider, because they see us a dial-up connection. That's going to get eliminated as we go forward."

MARKETING STRATEGY

To promote AOL Broadband, in March 2003 AOL released a $35 million, two-month advertising campaign developed by ad agency BBDO. The first two commercials, using the tagline "Welcome to the World Wide Wow," were unveiled on the Academy Awards telecast. One of the spots, "Six Million Dollar Man," was a parody of the opening of the old television show about a man with artificial parts that gave him superhuman powers. Instead of actor Lee Majors the spot featured AOL's familiar Running Man icon being rebuilt "better than before," making the case that AOL Broadband was a quantum leap above the old dial-up version of the service. The second spot featured actress Sharon Stone rolling around in bed, apparently after making love, telling someone off-camera, "that was the most amazing experience I ever had. So, can you stay? Or do you have to run?" A life-size version of the Running Man was then revealed. As he rushed offscreen, an announcer said, "The new AOL for Broadband is just a little sexier than you might have imagined." Left alone, Stone muttered in disgust, "icons," as if saying, "men!" Subsequent spots in this initial phase of the campaign showed a model whose body was covered with pop-up ads that were removed by AOL's new blocking software, and monks, who had taken a vow of silence, communicating to one another through AOL's instant messaging feature.

COMMODORE ONLINE

America Online was launched in 1985 as Q-Link, an exclusive online service for owners of Commodore personal computers that was introduced by Quantum Computer Services, Inc. Tandy computer owners were added in 1987 and IBM-compatible computers a year later. A Macintosh version of Q-Link was introduced in 1989, the same year that Quantum Computer Services unveiled a nationwide network for personal computer owners called America Online. In 1991 Quantum assumed the America Online name.

In addition to the television spots, the campaign included a large Internet component. Some of the animated Internet ads were designed for specific types of content. On the Weather Channel's website, for example, clouds forming the Running Man floated across the home page, then the clouds dissolved into an ad with the headline "Life needs a better outlook." The goal was to reach more than 80 percent of the online population within two days.

OUTCOME

The broadband campaign met with quick criticism. The "Welcome to the World Wide Wow" tag was widely ridiculed. In a review for Adweek, Barbara Lippert asked, "Has anyone actually uttered the words World, Wide and Web together since, like, 1999?" Simon Dumenco wrote in New York magazine, "The only wow factor is roughly along the lines of, 'Wow, does Sharon Stone need money that badly?'" As much as the tagline was criticized, the Sharon Stone spot was eviscerated. Lippert wondered, "And what is the take-away here? That if you sign up for AOL Broadband, like Sharon, you'll get screwed? And unlike what you see from an ISP, why would you want a lover who is superfast?" Dumenco further commented, "The irony is that in aligning itself with a silver-screen temptress whose moment has come and gone, AOL has only reminded us all how precipitously it, too, has faded."

After two months AOL once again put up its advertising account for review in what was called a "repitch." Catharine P. Taylor, writing for Adweek, cited sources who said that AOL was dissatisfied with BBDO's broadband campaign. Short disputed this contention, maintaining that the campaign had met all of its objectives. "This is a two-stage game," he said. "And I'm dead serious about stage one and I'm dead serious about stage two."

Stage two was the release of AOL 9.0 Optimized, a new version of the AOL software that included a fuller package of the company's broadband capabilities as well as enhanced features for dial-up users. Despite a new series of television spots, a new tagline ("Life needs …"), another online advertising blitz, and partnership deals to add popular content such as professional-sports video highlights, AOL continued to lose subscribers to faster or cheaper competitors. Very few of its dial-up customers making the switch to broadband elected to pay extra for AOL's premium-content package. Media analyst Tom Wolzien explained to Ann M. Mack of Adweek, "You can have the greatest advertising in the world, but if the value proposition isn't appropriate to your consumers, nothing's going to work." After little more than a year on the job, Short's tenure with AOL came to an end in February 2004. The advertising budget was also slashed by about a third, and the company reverted to a more conservative marketing approach.