America Online, under pressure to meet big ad revenue projections, is talking with rep firms and selling advertising in a slew of new formats and positions.
Included in the company's new inventory: a search product dubbed AOL NetFind, which launched last week; portions of properties built under content creation arm AOL Studios; and the recently launched chat advertising.
AD GOAL: UP TO $100 MILLION
The company is working hard to meet its own aggressive projections of $50 million to $100 million in fiscal 1997 online ad revenue. In the fiscal year's first half, ended Dec. 31, AOL generated $20 million in ad revenue, according to Jupiter Communications.
A deal with TelSave, which will pay $100 million for the right to market its phone service to AOL users, will bring in additional revenue, but the majority will probably fall under the category of direct marketing, said Mark Mooradian, analyst with Jupiter.
AOL, KATZ LINK?
On the rep front, Katz Millenium Marketing is a prime contender for AOL business. The company last year handled sales for AOL's search product Web-Crawler, now owned by Excite.
Former Katz Millenium President Neil Davis joined AOL in January as VP-director of sales. Asked if Katz was talking to AOL, new Katz President Jay Friesel said, "Stay tuned."
While rep firms won't play a major role in the service's interactive ad sales, they're likely to handle event-sensitive projects, said Myer Berlow, senior VP-interactive marketing.
"I think we will over the years work with different rep firms for different projects," he said. "We have the largest sales force in cyberspace right now . . . and we have no intention of replacing them with outside reps."
AOL TO SELL STUDIOS CONTENT
The company is expected to grow its sales force from about 30 to 65.
The NetFind search service will have a staff of 15 dedicated salespeople, Mr. Berlow said. A senior executive to lead the group could be named this week.
Chat advertising, meanwhile, could generate up to $50 million in annual ad sales, Mr. Berlow said.
AOL will also help its AOL Studios properties sell ads, a departure from a previous plan that required ventures like investment adviser Motley Fool, humor site Hecklers Online and the wedding-oriented the Knot to manage their own ads.
"Studios properties are part of the inventory we're going to sell," Mr. Berlow said. "It makes the income stream more predictable for them . . . To make them responsible for ad sales . . . was a burden."
While some brands like the six-month-old Knot have flourished (it sold $200,000 in ad inventory in its first two quarters), others have not.
AOL salespeople also will sell ads into Greenhouse Networks, a unit of AOL Studios.
"Myer's folks won't sell all the ad inventory in Greenhouse," said Greenhouse President Danny Krifcher.
However, Mr. Berlow's sales force will be able to take a cut of the ad revenue they sell into Studios properties.
Copyright March 1997, Crain Communications Inc.