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October 13, 2004
Does AOL matter?
AOL has paid a lot of money for full-page ads in the Wall Street Journal the past week touting a new "series of commitments."
The ad outlines eight customer-focused efforts; half are focused on online safety. It essentially translates to, "We're adding more concrete to our bunker."
AOL incorporates customer evangelism language in the ad, too: "We're driven by the thought that if we continue to improve our service, we can provide our members peace of mind. And through that, we'll improve their lives."
In this context, peace of mind does not improve lives. Thicker walls to keep out the big bad Internet is like adding bullet-proof vests to the doors of a Grand Am. Don't most AOL members expect the company to guard against worms, trojans and phishers? That's why they pay a monthly fee for dial-up service that costs nearly the same as speedier DSL.
What's missing from AOL's game plan these days is something worth talking about.
AOL's best attempt at inspiration seems like a "Daily Show" punch line: "If you're serious about a commitment, you don't just put it in an email to the staff. You publish it here. In the Wall Street Journal." The ad in the Journal actually says that, like some VIP fuddy-duddy.
Years ago, it seemed that AOL really mattered to millions of members, but too much neglect and greed during the early years of the AOL TimeWarner merger has taken its toll on AOL's evangelism. Between 1999-2002, the company dropped well behind MSN and Earthlink in the number of "net promoters," according to a Harvard Business Review study published in December 2003. (That study also found a strong correlation between the number of evangelists and top-line revenue, where AOL also stumbled.)
If AOL really wants to inspire a stronger level of evangelism, it should do what none of the other online services are doing: Encourage more member "ownership" by being more transparent and Napsterizing vast amounts of its knowledge.
It could start with network operations. Give members a dashboard view of what the company's network operations technicians see with real-time stats about IMs, email usage, spam stoppage, connections, etc. The sheer volume of data that race across AOL's network every minute would probably cause considerable jaw-dropping and buzz.
AOL would certainly inspire ownership by involving members in strategic management decisions. AOL was one of the first large-scale services that encouraged visitors to vote their opinions on news of the day; it should conduct more votes about itself. AOL should share with members some of the challenges the company faces and ask for input and a vote on what it should do. Encourage members to discuss with company representatives and each other in public forums about everything it's doing. Make comments and votes public. Embrace openness and disclosure, even if it does become somewhat messy or contentious at times.
Become a feedback machine. Feedback equals ownership.
One Internet company has set a model for this type of community-driven management, and it seems to have helped it pretty well: eBay.
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They are holding on to a poor business model. It is simple economics that drives this company. They are protecting a die-ing business. Until, they realize that their only path to success is to build an advertising business that is like yahoo or google based on unique and groundbreaking services, and stop trying to milk the dial-up internet access business, then they will die a slow death.
My advice. Kill the dial-up business now. Don't tie services to the dial-up or to the AOL for broadband premium services. Shift resources towards developing free innovative products. And monetize it through advertising.
I met someone yesterday that uses AOL to send out mailings for his club to 1200 people. AOL originally shut down his account and called him because they thought he was a spammer, but he told them that it is the only reason he still pays for AOL (even though he has broadband), and they made an exception for him for that account to send out bulk mail.
First, for AOL, that is a perfect opportunity to address a latent need. There are plenty of services out there that this guy could use for 20 bucks/month, and they'd be robust email mktg tools. But, he doesn't know about them. If AOL had this product, he'd most likely know about it, and they could keep his 20 bucks and actually offer him the right tool for the job.
I saw this ad yesterday and was left asking myself, ‘Who is the prototypical AOL customer these days?’
Given AOL’s 'piece of mind' positioning, I’d say AOL is targeting families as the best audience to grow its business. With that said, I’m not sure if families are as concerned with worms, trojans and phishers as they are with keeping their kiddos away from online porn.
I love the idea of giving folks a dashboard view of real-time data; however, I’m not sure AOL users are really interested in such seemingly wonkish data.
The question I want answered is ... if AOL is targeting families, then why are they advertising in the WSJ?
Would the vast majority of AOL's 22 million or so members be interested in a network operations dashboard? Perhaps not. But I don't see that as the primary strategy.
Even if a few thousand early-adopter gearheads found an AOL dashboard of data tantalizing, and blogged about it, and started discussions of how the company might better optimize network operations, then it would begin the necessary migration toward an open-source mindset. Very quickly the AOL congregation's knowledge would be enhanced, sparking an enhanced feedback loop, thereby created a stronger sense of member-ownership.
It's not so much the dashboard itself, but the idea of the dashboard that fulfills a greater objective: member involvement in the business.
As for AOL's dial-up business, Peter is right: it's dying. About 2.2 million subscribers canceled their service in the first two quarters of 2004. AOL has a good history of making complex technologies easy to use, and it could potentially do the same with VoIP, wi-fi telephony or portable media.
What if AOL were to buy TiVo?
AOL is running those WSJ ads for Wall Street, not for subscribers or employees. It's trying to demonstrate to investors that it's doing something about the shrinking nature of its core business.
But since Wall Street places its bets on how a business will fare in the future, it seems doubtful this effort will inspire much investor confidence.
