Marketing Campaign Case Studies

Saturday, February 2, 2008


America Online, Inc. (AOL) emerged in the 1990s as the largest Internet service provider (ISP) in the United States, a feat it accomplished in large measure through the mass distribution of start-up CD-ROMs and free trials. Many of its customers were families and people new to the Internet who were won over by AOL’s claims that it was easy to use. By the early 2000s, however, AOL’s strong growth came to an end, and it began to lose subscribers to cheaper dial-up ISPs as well more expensive but much faster broadband providers. On its rise to the top AOL had netted a great deal of Hispanic customers, and as a matter of course AOL became the leading portal for Hispanics. They were an alluring demographic—fast growing, family oriented, and cost conscious—making them an ideal source to replace the dial-up customers that AOL was losing at an alarming rate. To better attract and serve this market, AOL launched a Spanish-language portal called AOL Latino in September 2001. While AOL reached out to the Latino market with Spanish-language advertising, the commercials were merely translated versions of material developed for the general population. In 2003 AOL finally hired an Hispanic advertising agency, Casanova Pendrill Publicidad, Inc., and released an advertising campaign that was specifically developed for the Hispanic market. The AOL Latino campaign, the budget of which was not made public, unfolded in waves and included television, radio, print, outdoor, and Internet elements. The early TV spots highlighted AOL features that were popular with Hispanics: music downloads, education support, and instant messaging. Later the campaign emphasized the theme of empowerment, stressing the idea that having the Internet in the home was important in the educational development of children. AOL was pleased with the results of its Latino campaign. Although the company did not reveal subscriber gains, the campaign clearly solidified AOL Latino’s position as the number one Spanish-language ISP. Furthermore, it helped mitigate AOL’s continuing loss of general-population subscribers.

The precursor of AOL was Q-Link, an online service established in 1985 for owners of Commodore personal computers. The company that operated it, Quantum Computer Services, changed its name to America Online in 1991. With the advent of the World Wide Web in the 1990s, an increasing number of people bought personal computers to take advantage of the Internet. AOL vied with two other early online entrants, CompuServe and Prodigy, to become the market leader among Internet service providers (ISPs). AOL was relentless in its efforts to distribute start-up CD-ROMs and enticed new subscribers with free trials of its service. AOL was successful in selling itself to parents who wanted to maintain limits on content for their children; it also attracted customers who were simply new to the Internet and preferred more guidance than was available with other services. In 1997 AOL became America’s largest online service, boasting 8 million subscribers, a number that would double just a year later. During its rise to the top AOL attracted a large number of Hispanics. It was not until September 2001, however, that it launched AOL Latino to cater specifically to the Spanish-speaking market. In July 2002 the company established a U.S. Hispanic interactive-marketing unit. By this time AOL had merged with Time Warner, creating the largest media company in the world, and the online unit came under increasing pressure as the subscriber base, which had reached about 25 million in the United States, began to erode. AOL was losing out on one end to cheaper dial-up services and on the other end to providers of faster high-speed Internet connections. As a result it began to view the Hispanic market as an important source for replenishing its pool of customers. In January 2003 Advertising Age reported, ‘‘2.5 million Hispanic households [were] likely to go online for the first time in 2003, and . . . those new to the Internet [were] increasingly Spanish-dominant.’’ In January 2003 Casanova Pendrill Publicidad, an ad agency that was part of Interpublic Group and was based in Irvine, California, was awarded AOL’s Hispanic advertising account. In May of that year AOL released its first-ever comprehensive campaign targeting Hispanics, both to reinforce its position as the top ISP for Spanish-speaking Americans and to attract new business. Prior efforts were simply Spanish-language versions of advertising created for mass audiences.

In 2000 the Hispanic population in the United States numbered more than 40 million, or about 13 percent of the overall population. It not only was the largest minority group in the country but also was growing at a fast clip: about 5 percent each year, four times faster than the general public. Thus, according to the U.S. Census Bureau, by 2010 there were expected to be 50 million Hispanics in the United States, making them an increasingly inviting opportunity for marketers of all stripes. The AOL Latino campaign targeted bilingual and Spanish-dominant speakers who either planned to switch ISPs or intended to begin using an ISP in the next 6 to 12 months. Within that group AOL looked to appeal to families, as it did with the general population. Mary Ann Donaghy, AOL’s executive director of marketing strategy and new-product development, explained to Advertising Age, ‘‘Hispanic Internet users tend to be younger than other users, are more likely to use instant messaging and to download music and videos, and spend more if they shop online, especially on music and DVDs.’’ Therefore they were an ideal audience for AOL’s product-enhancements pitch, which addressed these activities.

In appealing to the Hispanic market AOL faced much of the same competition as it did with the general population, because many in the target demographic were bilingual and might easily choose an English-language Web interface over a Spanish-language one. Hispanics tended to be very price sensitive, so they generally opted for dial-up connections. Thus, AOL had to contend with cheaper dial-up ISPs, such as Earthlink, the NetZero and Juno brands of United Online, Yahoo!, lesser-known brands such as Copper and, and local ISPs. In the broadband category AOL competed against telephone companies offering DSL service and cable TV operators offering cable-modem service, which was even faster than DSL. An increasing number of consumers opted for a high-speed connection, foregoing AOL’s offer of premium content at an additional cost. AOL also had to contend with small Spanishlanguage ISPs—such as, which teamed up with the popular Hispanic portal Para—and a more formidable challenge from Microsoft’s MSN, which in 2001 bought Yupi Internet, a Spanish-language Internet portal. Although it faced a lot of competition for the business of Hispanics, AOL was the unchallenged market leader.

America Online, introduced by Stephen M. Case in 1985 as a small dial-up Internet service called Q-Link, evolved into a media powerhouse 15 years later. In 1999 it acquired the companies Netscape Communications (known for its Web browser), MovieFone (a ticketing service), and two major Internet music providers: Spinner Networks and Nullsoft. A year later it added the mapping-services company MapQuest, and in 2001 it merged with Time Warner in a $183 billion deal that created the largest media company in the world. Case was named chairman of the new behemoth.

The AOL Latino campaign, estimated to be budgeted at $10 million, broke in May 2003 and included television, radio, and print elements. The focus was on music downloads, education support, and instant messaging, features that Hispanic consumers used more than the general population. Writing for Adweek Online, Ann M. Mack reported that the two initial 30-second television spots played on ‘‘the themes of family, friends and education, and emphasize[d] AOL features that are appealing to Hispanics, such as entertainment and the ability to communicate with people domestically and abroad via the Web.’’ The spots relied on the tagline ‘‘Get closer to your world’’; one showed a boy clicking a mouse to explore a botanical garden online, and another showed a girl clicking on a link to listen to the words of Abraham Lincoln. The spots ran on the popular Spanish-language television channels Univision, Telefutura, and Galavision in several of the top-10 Spanish-speaking markets, including Chicago, Miami, New York, and Los Angeles. They were aired again in July 2003. A print component of the campaign also began in May, and radio spots were unveiled in July.
A second phase of the AOL Latino campaign began in November 2003 and included television, radio, print, and outdoor advertising. Three of the television spots featured AOL’s Running Man icon. For example, the spot titled ‘‘School’’ depicted the character in a classroom. While writing in Spanish on a blackboard, a teacher heard a disruption and turned around to ask, ‘‘Who’s passing notes?’’ (‘‘Notes’’ in Spanish translated as ‘‘messages,’’ thus drawing a connection to AOL’s instant-messaging feature.) The children in the room then pointed to an unlikely student, the Running Man, AOL’s icon for instant messaging, who looked away in an attempt to appear innocent. The spot closed with him dashing out as class was dismissed, with a voice-over commenting, ‘‘America Online learned Spanish. . . introducing the new AOL Latino.’’ Writing for Adweek, Rebecca Flass explained, ‘‘In showing Running Man learning Spanish, AOL is hoping to convey that it now speaks the language of Latinos.’’ The second Running Man spot, ‘‘Housekeeper,’’ featured a mother apparently interviewing an unseen person as a housekeeper, asking how the person intended to protect the kids. The punch line of the spot was the revelation that the woman had been addressing the Running Man and talking about AOL and its parentalcontrol features. The third spot, titled ‘‘Love,’’ followed the same pattern, this time with a man in a cubicle talking to someone offscreen, presumably a lover. ‘‘Finally we understand each other,’’ he said. ‘‘We’re talking the same language.’’ Once again the Running Man was revealed as the silent partner. The tagline for these spots was ‘‘Ace´rcate a tu mundo’’ (Get closer to your world). Other television spots in this phase of the campaign were 30-second vignettes that, according to company literature, were ‘‘meant to supply tips to users that address offerings like homework help, instant messaging, and parental controls.’’ The campaign’s radio spots, featured on the 66 stations of Univision Radio, focused on Hispanic families’ affinity for Spanish even when communicating online. Billboard ads were placed in the top 10 Hispanic markets, print ads appeared in leading Spanish-language magazines, and Spanish advertising was run on websites. In addition, AOL began an aggressive distribution of CDs containing AOL Latino 9.0 Optimizado (the Spanish version of the new version of AOL, AOL 9.0 Optimized) through direct mail. In June 2004 AOL began a final campaign phase that ran through the end of the year. The advertising shifted its focus to the theme of empowerment; this idea was based on market research showing that 70 percent of Hispanics believed that having an Internet connection in the home increased a child’s performance in school, thus giving them a better chance to go to college and ultimately land a good job. The first television spot in this series, titled ‘‘The Talk,’’ showed a young boy asking his parents why the family did not have Internet access at home. The spot then showcased AOL Latino’s educational features, such as bilingual homework help. The father then brought home a computer with access to AOL Latino; the family began to experience the Internet, and the spot closed with the boy bringing home an excellent report card.
AOL also introduced a pair of supporting programs. One, the ‘‘Sign On a Friend’’ promotion, paid a $50 bounty to an existing member when he or she referred a friend to AOL Latino. The other was the introduction of the AOL Optimized PC, a personal computer priced at $299.99 with a one-year AOL membership commitment of $23.90 a month; it was available at Office Depot stores and other retailers. In addition to a computer and a printer, the system came bundled with a suite of software that included word-processing and spreadsheet applications. Although the PCs were made available to all consumers, they were especially suited to cost-conscious Hispanic families and could be purchased preloaded with AOL Latino service. Moreover, the PCs could easily switch from Spanish to English to accommodate bilingual consumers and families with members who preferred one language over the other.

AOL continued to experience serious erosion in its overall number of U.S. subscribers and subscriber revenues, losing out to high-speed providers as well as less-expensive dial-up ISPs, but AOL Latino was able to make gains with the Hispanic population to offset losses in the general public. The campaign succeeded in doubling normal call volume to AOL member-services centers, as the target audience embraced the opportunity to receive more information about a free trial. The company did not reveal the exact number of Hispanics it added to its customer base other than to say that AOL Latino ‘‘significantly increased memberships.’’ Focus groups and other research, according to the company, also showed that the campaign was well received by the target audience.

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