CompuServe redirects marketing

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CompuServe is revamping its marketing department as part of a plan to increase subscriber loyalty through direct response efforts.

The company last week named Director of Interactive Advertising Regina Brady to the new post of director of member acquisition and retention. She will report to Gail Walls, director of relationship marketing.

Although earlier this fall Scott Kauffman, VP-online services, said the service is moving away from traditional advertising, he said CompuServe still has a relationship with general agency of record DDB Needham Worldwide, Chicago. But the executives who handled consumer advertising, Cynthia Vahlkamp, VP-marketing, and Tom Cullivan, director of advertising, have left and their positions have been eliminated.


Both executives resigned amid reports that the service's marketing budget would plunge to $100 million to $120 million, rather than the $200 million the marketing department thought it had secured.

CompuServe currently has 5.2 million subscribers worldwide, compared with nearly 7 million at America Online.

Ms. Brady will work with the service's direct response agencies--which include Martin Agency, Richmond, Va., and Resource Marketing, Columbus, Ohio--to develop loyalty programs. Earlier in her career, she worked in direct marketing roles at Hearst Magazines, Columbia House and Westinghouse.

Mark Sroufe, manager of editorial development, assumes Ms. Brady's previous responsibilities as manager of strategic accounts.

Mr. Kauffman said the service will test various direct messages as it distributes its latest upgrade and also when it begins promoting WOW! for Teens, which launches later this fall.

"We'll see different patterns of usage with the service. We'll be able to package CompuServe for these different audiences," he said.


As for new subscriber efforts, "I think there's going to be a great emphasis on OEM deals," Mr. Kauffman said. OEM (original equipment manufacturer), or "bundling," deals provide CompuServe software on computer hard drives. Prodigy has also used this strategy in rolling out its new service, Prodigy Internet.

CompuServe isn't the only service redoubling its retention efforts at a time when it also needs to grow its subscriber base. AOL launched a broad $100 million TV branding effort from TBWA/Chiat Day, New York, in October, and boldly claimed it plans to have 10 million subscribers by the end of next summer.

But the company also is rethinking the way it services current subscribers. Two weeks ago, Chairman-CEO Steve Case seemed to back off the aggressive audience growth plans, stating in a conference call that AOL will be "modulating [its] marketing efforts to make sure we grow in a steady, controlled fashion." AOL's past growing pains have resulted in access delays and other problems.

AOL also said it would take a one-time charge of $385 million this fall as a result of a change in the way it accounts for subscriber acquisition costs.

Contributing: Debra Aho Williamson.

Copyright November 1996, Crain Communications Inc.

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