Rumors are swirling, but Prodigy plugs along

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Service taps exec to lead renewed push for advertising

Prodigy, the service that set the model for online advertising, last week hired its first senior-level ad sales executive.

Next month, Prodigy launches a Web-based shopping mall that will be open to both subscribers and non-subscribers. And it has a slew of new content initiatives in the works.

Despite rumors of the service's possible sale by its owners IBM Corp. and Sears, Roebuck & Co., Prodigy keeps on plugging.

FOCUS ON ADVERTISING

As talk of Prodigy's future heated up last week, the online service named Scott Schiller to the new post of VP-advertising sales. Mr. Schiller had been an account director at MTV Networks, former home of Prodigy President Ed Bennett.

Mr. Schiller will report to Josh Grotstein, senior VP-content, who joined Prodigy a month ago from NBC Online Ventures.

Appointing an advertising VP highlights the increased priority ad sales will play in Prodigy's business model. The service, which has revenue streams stemming from usage, transactions and advertising, is focused on strengthening its advertising income.

"Advertising has got to be the driver of profit online," said Mr. Grotstein. "We're focused on incentivizing directors of Prodigy's content areas to be as profitable as possible."

Prodigy generated about $10 million in ad revenues last year.

TELEREP STAYS ON

The service will continue contracting ad sales to TeleRep, an independent New York-based media sales firm. However, Mr. Schiller will oversee TeleRep's Prodigy sales force as well as hire an internal sales department.

"The online industry is analogous to the cable industry 10 years ago," said Mr. Schiller. "Cable was a very conceptual sell, like online. The key will be to develop relationships with advertisers and content providers and bring the two needs together."

Prodigy will announce new rate information in a few months. For now the service is "focusing on creating content and figuring out exactly what advertisers want from Prodigy," Mr. Schiller said.

CREATING NEW CONTENT

Among the new content initiatives: a cyberzine called Stim and a virtual online platform dubbed Betty.

Within the next month, Prodigy plans to launch a Virtual Mall that will eventually be open to anyone on the World Wide Web. Retailers in the mall include J.C. Penney Co., Land's End, Hammacher-Schlemmer, Sears, Logos Online, PC Flowers and Hanes.

Technology developed by Los Altos, Calif.-based BroadVision will allow Prodigy to track users' moves within the mall, even when it is fully Web-based.

"Research will become a huge part of Prodigy's advertising and editorial benefits," said Mr. Grotstein. "Prodigy will be more than an eyeball sell. Interactive is about accountability and knowing exactly what people want."

MOVING TO THE WEB?

Prodigy's aggressive moves in both advertising sales and content have many insiders speculating on its future as a proprietary service.

"We're going fully Web-centric," Mr. Grotstein said.

Jane Hodges contributed to this story.

Copyright January 1996 Crain Communications Inc.

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