INTERACTIVE;FLEDGLING WOW! SPREADS ITS WINGS;ONLINE SERVICE TO START CARRYING ADS MUCH EARLIER THAN EXPECTED

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There's a swan sitting on a nest just below Scott Kauffman's second-floor office window. For the general manager of WOW!, CompuServe's brand-new family-targeted online service, the metaphor of a parent waiting for eggs to hatch couldn't be more appropriate.

After launching March 25 with a hail of publicity and a one-month free trial offer, WOW! is just starting to sign on its first paying subscribers. The service also will start carrying ads as early as next month, much sooner than Mr. Kauffman had planned.

Nestled in a two-story office building in Dublin, Ohio, on the outskirts of Columbus, WOW! is bursting at the seams. Though it's just months after the service moved out of the CompuServe world headquarters, there's already talk of moving some of WOW!'s 120 staffers to a different, larger office.

ONLINE CHALLENGE

There's no denying that WOW! has an uphill fight to succeed in the competitive online market. Aimed squarely at computer newbies, WOW! works only with a Windows 95-equipped PC. A version for Apple Macintosh isn't due until the end of summer. And with two discrete services for adults and kids and one on the way for teens, WOW! is dicing the online market into minute segments.

"We've just tried to take all the edge and the angst and all the hype out of the decision" to join an online service, Mr. Kauffman said from his spacious office with views of a pond and Ohio farmland. A just-completed $20 million launch ad campaign from Martin Direct, Richmond, Va., and Re-source Marketing, Columbus, emphasizes the home and family.

MOVING INTO ADS

Mr. Kauffman was initially skeptical of including ads too soon on WOW!, wanting instead to build a stable subscriber base. But the service is already starting to talk to advertisers about packages including promotional opportunities, links to Web sites, contests and other offerings.

"Now that WOW! has been deployed and received well, we can focus on building non-membership revenues more quickly," said Sam Uretsky, director of product management.

Package pricing depends on what the advertiser wants to do; WOW! plans to sell more traditional banner advertising later on.

On the editorial front, Editor in Chief Howard Blumenthal left shortly following the launch after spending several months commuting from his home in Pennsylvania. Tim Nix replaces him, while continuing as director of creative services.

WOW! also took the risky step of creating a kid-safe Web environment by blocking access to many sites. The service maintains a list of appropriate sites and checks daily to make sure they meet WOW! guidelines.

POSSIBLE PROBLEMS

So far there have been no breakdowns in the system, Mr. Kauffman said. But critics argue that such stringent editorial control could backfire on WOW! the first time a child finds a site with sexually explicit content.

Mr. Kauffman bristles at the notion that WOW! is practicing censorship.

"The term that I find odious is censorship. We are actively filtering. ...There are no censorship issues here," he said.

Looking ahead, WOW! has to prove itself on a number of fronts. Much of its content, including Money, Entertainment Weekly and Entertainment Drive, spills over from the parent CompuServe Information Service.

And as part of a newly public company, its financial data will quickly come under scrutiny.

Distribution deals will help; AT&T WorldNet Service will provide access to CompuServe and WOW!, and a deal to become an icon on the Microsoft Windows screen, as America Online has done, is rumored near.

The biggest challenge for WOW! will be to keep subscribers from signing off once they've passed the newbie stage. If WOW! is lucky, they'll stick around and build swan nests of their own.

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