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AOL ROLLS OUT BROADBAND SERVICE, FINALLY

‘Most Significant Investment We’ve Made in Many Years’

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NEW YORK (AdAge.com) -- AOL is finally offering a broadband service -- something pundits have been suggesting for years.
The campaign for AOL High Speed focuses on migrating dial-up members to broadband. About 20% of the current membership base is currently broadband subscribers.

The roll out of AOL High Speed will begin next week with a multi-million dollar campaign handled by BBDO. AOL is offering broadband cable and DSL connections in partnership with providers BellSouth, Time Warner Cable, Verizon and AT&T. The service will be available nationwide. The objective is to migrate the portal’s 20 million dial-up subscribers to broadband.

AOL was an Internet pioneer that enticed America to discover the Internet with its ubiquitous direct mailing of subscription CDs. But in recent years it suffered under the moniker “Internet with training wheels” because of its perceived reluctance to evolve. It began to bleed members as consumers nationwide migrated to broadband. Last fall it rolled out a new, free broadband-enabled Web site, AOL.com, in a $50 million campaign split among Atmosphere BBDO, Carat and Martin Agency.

This campaign is considerably larger. “The majority of our spending going forward will be supporting the broadband effort,” Joe Redling, president of AOL’s Access business said. “It’s probably the most significant investment we’ve made in many, many years.”

BBDO will handle all aspects of the campaign. Initiative will handle media. The campaign includes TV, cable, print and online ads.

The effort focuses on migrating dial-up members to broadband. About 20% of the current membership base is currently broadband subscribers. The messaging emphasizes that it is easy and inexpensive to order AOL High Speed. The service is offered for about the price of dial up -- $25.90.

Under pressure to monetize and modernize, one of AOL’s strengths is its 20-million-name database. It is thought to be one of the enticements in a deal last month AOL signed with Google in which Google got a 5% stake in AOL for $1 billion. But Time Warner Chairman Richard Parsons has admitted that unless those dial-up members become high-speed customers, they will quickly lose their value.

For the third quarter 2005, revenue at AOL fell to about $2 billion from $2.1 billion in the third quarter of 2004, reflecting a 28% increase in ad revenue that could not compensate for a 10% decline in subscription revenue.

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