AOL SPLITS WITH AD AGENCY WIEDEN & KENNEDY

BBDO Assigned to New Fall Branding Campaign

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NEW YORK (AdAge.com) -- America Online, which has been working to redefine its brand in a broadband world, today parted with one of its ad agencies, Wieden & Kennedy.
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Wieden, based in Portland, Ore., said in a statement today that it resigned its account to handle branding for AOL due to "creative differences."

Estimated $100 million account
The assignment was reportedly estimated at $100 million, although AOL would not confirm that figure.

Another roster agency, Omnicom Group's BBDO Worldwide, is creating a branding campaign that will roll out this fall, said Richard Taylor, AOL's senior vice president of brand marketing.

AOL is a unit of Time Warner.

No change in strategy
Wieden's resignation of does not mean AOL is changing its strategy, Mr. Taylor said, though he would not say precisely what that strategy is. The fall campaign will include offline and online elements, he said. "It's going to be a brand campaign talking about dial-up as well as broadband," he said.

Will the ongoing branding work continue to incorporate big events such as the Super Bowl or celebrities such as Sharon Stone or the family from TV's American Chopper? "Stay tuned," Mr. Taylor said.

A five-month search for an agency ended in June 2003, with Wieden winning the branding business and BBDO and sibling DDB Worldwide, both in New York, getting the broadband portion of the business.

Wieden created AOL's Super Bowl 2004 ads, which focused on AOL 9.0 making dial-up connections faster. In May, Atmosphere BBDO, the interactive arm of BBDO, handled an online campaign to promote AOL's premium services to consumers who already have broadband. (AOL does not offer a broadband connection.) The premium service emphasizes AOL's security for children and speed and ease of use for enjoying video and music.

AOL spent $220 million in measured media in 2003, according to TNS Media Intelligence/CMR. It spent $13 million in January for the Super Bowl campaign, and $63 million for the first four months of this year.

Losing subscribers
AOL is losing narrowband subscribers, but gaining roughly the same number of users for its broadband premium service, according to Jupiter Research, which analyzes figures AOL reports each quarter.

The company has 24 million members, with about 23 million signed up for its narrowband, or dial-up connections, and 2.8 million subscribed to the AOL for Broadband service.

Between the fourth quarter of 2003 and the first quarter of 2004, AOL added about 700,000 customers for its premium services for broadband. For dial-up services during the same period, it lost 800,000.

AOL is still the nation's leading Internet service provider, with 31% of the market share, but that share has been slipping away in recent years.

Branding challenge
Part of the ISP's branding challenge will be to demonstrate to customers why they need AOL if they are getting broadband access elsewhere. None of their premium services are unique; most providers offer them, said Joe Laszlo, a senior analyst at Jupiter Research.

"But if AOL convinces most of their dial-up service customers they are losing to broadband to keep some AOL service, they will be OK because that dial-up membership is a huge core to draw from," Mr. Laszlo said.

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