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For all the expectations that the Internet is breaking boundaries worldwide, many online service providers are finding that national borders are still very real.

Providing access to the Internet-a booming industry in a few world markets-falls somewhere between novelty and mystery almost everywhere else. U.S.-based online providers CompuServe, America Online and Prodigy Services Co. (which has no subscribers outside North America) rely largely on traditional media to sell their technology to business users and consumers outside the U.S.

Europe Online, Luxembourg, introduced its online service Dec. 15 to Luxembourg, France, Germany and the U.K, promoting itself as the first European online service, providing language-sensitive, country-specific content.

Ads run in dailies and consumer and computer magazines in Germany and the U.K. French ads break in June. TV spots in all markets will break this year. The service will also promote itself through future online events, targeting specific groups.

Scholz & Friends, Berlin, handles German marketing, targeting young professionals, and Impact-FCA, London, handles Europe Online's family-oriented marketing in the U.K.

CompuServe says its primary international rivalry is with other online service providers, not with new Internet access providers.

"Each market works differently, depending on national nuances and awareness levels," said Tom Cullivan, CompuServe's director of marketing. "But marketing concentrates on where the infrastructure exists; you have to have reliable phone lines" to operate a service.

As telecommunication companies race into emerging markets, such as Eastern Europe, rapid Internet growth is expected to develop more quickly.

Of CompuServe's 4.2 million users in 70 countries, more than 3 million are in the U.S. with most of the rest in Europe, Mr. Cullivan said. The marketer operates offices in London, Paris and Munich, each handling marketing nationally and in nearby countries; the U.K. handles Scandinavia and the Netherlands, for example.

But outside Europe and North America, CompuServe's penetration plummets.

Venezuela is home to 5,000 CompuServe subscribers, the online service's biggest South American market. A campaign created in-house touts the service as a management tool, targeting corporate and high-end personal users.

CompuServe is preparing to encounter competition from two new Venezuelan rivals, TelCel and national telecom CANTV, in addition to eight existing rivals. CompuServe gets additional exposure from TV station Venevision, promoting itself several times daily as the first Venezuelan station on the Internet through the service. In Mexico, CompuServe expects its subscriber base to triple, to 21,000, by yearend. Pleca Comunicacion, Mexico City, buys in dailies El Financiero and Reforma, financial and computer magazines and urban outdoor boards. Most of Mexico's estimated 10,000 to 20,000 computer users with Internet access are affiliated with universities and institutions, and CompuServe competes with SPIN Internet and Datanet, two local providers.

CompuServe's European offices generally adapt U.S. advertising where it's applicable, and place advertising in computer and professional magazines, as well as dailies, financial papers and significant below-the-line promotion. Martin/Williams, Minneapolis, handles U.S. print and broadcast, and the $10 million U.K. business, with SMI, London, is up for review, with a decision expected this month.

The U.S. and other markets see competition brewing from service providers, which offer users Internet access for less money than the traditional commercial online providers do.

Local providers present a challenge in markets like Australia and Venezuela, said Bill Truesdale, CompuServe director of international marketing, but marketing isn't yet price-sensitive. "Our affiliates are spending advertising dollars on new pricing and lower-cost access, and there will be more in the future."

In the U.K., CompuServe has been active for most of this decade, running brand and direct-response campaigns in computer publications and national newspapers, including The Guardian's weekly information technology supplement.

The service provider's primary marketing investment in Europe is with direct-response media, said Mike Williams, marketing communications manager at CompuServe. "We're advertising in media that we'd expect to do more branding, and it's still doing excellent results."

Such a new, freewheeling industry also provides unusual marketing opportunities.

"When Microsoft Network launched here in August, it sponsored a huge free edition of The Times," Mr. Williams said. "We bought the inside front cover of its special supplement, at one-fiftieth the cost MSN paid for the whole sponsorship-they paid for our ad, in effect, and we generated incredible response."

CompuServe's international marketing, however limited, is relatively advanced. America Online, through a 50-50 joint venture in Hamburg with German publisher Bertelsmann, is starting to focus on reaching out to the French, German and U.K. markets, with the goal of providing the service in the native languages for each country.

Grey, Dusseldorf, has handled AOL's print ads in Germany since the service broke there in mid-December, and BDDP, Paris, begins a campaign for AOL in France this month. AOL seeks a full-time agency for promotional inserts and direct mail in the U.K., where service began in January. AOL uses the same newspaper and computer magazine print ads and direct marketing to consumers' homes in each market.

"We are looking at expanding into other European countries," which have not been specified, said Pam McGraw, spokesperson.

AOL Canada also started up at the end of January, with content specific to the market, and with plans to go bilingual. The service is now largely English-language. AOL is also training its sights on Japan, contingent on finding a partner for establishing a joint venture, but hasn't set a date for entering the market.

"Initially we're looking at countries with a concentration of home computers, to go after the home consumer market," Ms. McGraw said. "We want to embrace the Internet, as we've done in all markets. Our goal is consumer-oriented service, and we want to provide the easiest way to access online service, by integrating the Internet with our online services."

AT&T Jens, Japan's first commercial provider of Internet services, will be available in April, targeting business and private consumers, said spokeswoman Chiyoko Saeki. "Competition is getting very severe, especially in price, in Japan.

"However, we focus on quality of service rather than being involved in the price war," she said. "We are strong in professional services such as network designing, coordination with business connections, application designing, staffing and training."

AT&T Jens traditionally has spent little on ads by Dentsu, Young & Rubicam, Tokyo, but said the budget may expand with a growing customer base.


The browsers, already challenging the rule of the online access providers in the U.S., are becoming more of a force inter-nationally as well. U.S.-based UUNet became the largest Internet provider in the U.K., the second-largest Internet market after the U.S., by acquiring Unipalm Pipex.

It also bought a 40% stake in EUNet, Bonn, Europe's second-largest provider, in January. UUNet's Unipalm division plans print advertising by Donino & Partners, Atlanta, and other below-the-line promotion to market itself to U.S. business users. European marketing is up in the air.

"There are no Internet companies doing any corporate advertising aside from UUNet," said Alan Taffel, VP-marketing. "Our product advertising will feature various types of Internet access as well as Internet software. Amajor campaign involving several venues will break this year.

"Our intention is to be a truly global company," he said. "Over time, we'll ensure all of our messages and campaigns have a consistent look" in Europe and the U.S.

Psinet subsidiary InterCon Systems, a software marketer breaking into the Internet market, has distributors in the Americas, Middle East, Europe and Asia.

"Marketing is really a shared proposition: We either provide market development funds or royalty incentives to distributors, or in prime markets," including the U.K., France, Germany, Scandinavia, Japan and China, said Dave Hudson, president-CEO. "We make a conscious decision to advertise or do trade shows."

Intercon's revenue mix is about 38% international but it hopes for a rise to 50% by yearend.

"Brand recognition for U.S. software is dependent on advertising in U.S. journals, because internationally there are only a handful of highly regarded technical journals dedicated to the Internet and networking."

Woolward, San Francisco, handles consumer and business print, along with Psinet's agency Poppe Tyson, New York.

Contributing to this story: Sophie Hares, Caracas; Mary Sutter, Mexico City.

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