@Home, Excite union to create broadband portal

By Published on .

Last week's news of @Home Corp.'s $6.7 billion acquisition of Excite shows a glimpse of the broadband portal future. While the pending merger presents some advantages for advertisers, it also has potential drawbacks for the two parties.

The all-stock deal, which is an Internet record, brings together neighboring Redwood City, Calif., companies in an effort to offer complementary services. Both share Kleiner Perkins Caufield & Byers as a financial backer.

"We now have the ability for advertisers to reach people at home, at work, on their TVs or on their PCs, and with rich media," said Susan Bratton, director of interactive advertising at @Home. "That's why Excite was a perfect fit for us."


To communicate that positioning, the combined company has a working tagline of "All band (broad or narrow), all devices, all the time."

Excite brings to the equation its brand name, content and reach of 20 million registered users. Meanwhile, @Home has 330,000 subscribers signed up for its high-speed Internet access, and says it has cable distribution agreements reaching 60 million homes. Excite will be merged into @Home's media division, calling itself Excite @Home, and introduce a broadband portal service later this year.

It's important for Excite to continue its portal and search-engine services for current Web users as well as its marketing efforts to attract customers to @Home, which plans to expand its high-speed cable network in '99, said Joe Kraus, senior VP and co-founder at Excite.

"We're going to put the pedal to the metal in terms of marketing," Mr. Kraus said.

In December Excite broke a national TV campaign, from Lowe & Partners/SMS, New York. Lowe won the estimated $15 million business in October after a review that involved several agencies. Excite had been without an agency since May. Odiorne Wild Narraway & Partners previously handled its advertising.

There is no agency of record for @Home, and no decisions have been made yet how the marketing assignments for the merged companies will be handled. Ms. Bratton said '99 marketing and advertising will combine budgets of both companies.

Mr. Kraus said it's too early to tell whether Excite will add the @Home name to its current spots or when a campaign would break touting the combined businesses.

The vision of the combined entity is one service, all bandwidth, all devices, on one consistent interface: narrowband, broadband, TV, telephone and pager, said Mr. Kraus.


People are storing more personal information on the Internet, he added, alluding to Excite Communities, a service it introduced in '98 that combined e-mail, chat, calendar and other online networking functions. He said as people upgrade their Internet access to tap the capabilities of the Excite subsidiary, @Home has accumulated a database of more than 57 million user profiles.

The combined reach of @Home and Excite "gives us the ability to build the largest predicative database in the world," he said, saying its database stands out from others because it can predict consumers' purchase intent.

With @Home, Excite also has easy access to rich media. Not only is @Home already running multimedia ads, but it recently purchased Narrative Communications, which makes Enliven, a multimedia streaming software. And while they're still trying to figure out the best way to use rich media, advertisers prefer video and audio ads over static banners, research shows.

Even though @Home has a small user base, it's been able to attract a roster of blue-chip advertisers, including AT&T Corp., Johnson & Johnson's Tylenol brand, Toys "R" Us, Bank of America and others.

Also, ad serving company MatchLogic recently announced plans to extend its Internet tracking service to cable to monitor viewers' response to interactive TV spots.

"Ultimately, all advertising on the Web will be rich media," Ms. Bratton said, pointing to a five-year time frame. Through MatchLogic, "We have a company that can serve ads to any Web site, so our advertisers can take a campaign and run it everywhere."

Tracking cable advertising response, a "local advertising medium that's slowly maturing," is one advantage Excite has over competitors such as Lycos, said Peter Krasilovsky, program director, Kelsey Group, Princeton, N.J. "MatchLogic makes it easy to target the local subscriber."

Despite all the apparent selling points, the @Home/Excite deal is far from a perfect union. The recent wave of portal consolidations--America Online buying Netscape Communications Corp. for $4.2 billion and Walt Disney Co. buying a stake in Infoseek Corp.--has eroded Excite's audience, causing it in the last year to slip from No. 2 behind Yahoo! to No. 6, according to Media Metrix.

"I think the Excite deal has one problem with it," said Mr. Krasilovsky, "Excite is in a desperate race to finish among the top five portals in 1999."

With broadband usage still low, "@Home is a medium for 2000 or 2002," he said. "I don't see how a non-media company can help push the envelope for Excite."

There are potential marketing and content provider conflicts that need to be sorted out. Mr. Kraus said there didn't seem to be any, but added that it's still investigating the pooled partners from @Home and Excite.

Mr. Krasilovsky pointed out that Cox Communications, which is a cable partner for the @Home Network, is also a major investor in LookSmart, a Web directory and an Excite competitor.

Some search engine competitors also argue it's too early to determine who's going to win the broadband game and whether that winner will come from cable, satellite or the telecommunications industry.

"We didn't want to turn ourselves into a singular distribution point," said Jeff Mallett, president, chief operating officer at Yahoo!, which briefly talked to @Home about a partnership. "We'd rather work with multiple partners."

Mr. Mallett said Yahoo! also talked to Excite about a buyout, but discussions died out. "There wasn't enough incremental value," in buying Excite.

Excite's Mr. Kraus said merging with another media company made less sense than merging with a technology and backbone provider such as @Home.

And on the issue of limiting its distribution by partnering with @Home, Mr. Kraus contends the Excite site still will be available across the Web, and integrating an Excite interface into @Home's content just makes it convenient for users.

Contributing: Kate Maddox.

Copyright January 1999, Crain Communications Inc.

Most Popular
In this article: