In Agency Search, 2 AOL Keywords: ‘Pizzazz,’ ‘Sizzle’

The outcome of America Online’s agency review, and the new content-focused positioning the winner will craft, could dictate the survival of the union between the world’s No. 1 Internet service provider and entertainment giant Time Warner.

On Wednesday and Thursday, AOL will hear pitches from six finalists pursuing the creative portion of its $150 million U.S. advertising account. A successor to incumbent Gotham may be chosen by week’s end.

Finalists were briefed in separate videoconferences last week by AOL’s new evp of brand marketing, Len Short. Their mission: To rebrand AOL as an entertainment and information resource, sources said, focusing on the upcoming relaunch of the AOL Broadband service as the key point of differentiation.

Making presentations at AOL headquarters in Dulles, Va., will be Omnicom shops BBDO and DDB, both New York; Publicis Group’s Saatchi & Saatchi, New York; Maxxcom’s Crispin Porter + Bogusky, Miami; Interpublic Group’s Hill, Holliday, Connors, Cosmopulos, Boston and New York; and independent Wieden + Kennedy in Portland, Ore. IPG’s Gotham in New York was dismissed in early January, a week after Short arrived at AOL from Charles Schwab & Co. Pile and Co., the Boston consulting company, is overseeing the review.

Short is looking for “pizzazz” and “sizzle” in agency presentations, sources said. One source said nothing short of “a big, glitzy, multifaceted platform” that can be leveraged for several years will suffice. At Charles Schwab, Short oversaw celebrity-driven spots from BBDO, with spokespeople such as skiier Picabo Street and the NBA’s Dikembe Mutombo discussing investing.

AOL has been the poorest-performing AOL Time Warner property, with ad revenue dropping 40 percent last year to $1.6 billion. In January AOL Time Warner reported a net loss for 2002 of slightly less than $99 billion, the largest in corporate history.

Though AOL ranks as the biggest ISP with more than 35 million global subscribers, its growth has dwindled. The company said it added 2 million subscribers worldwide last year, compared with 1.9 million subscribers in fourth quarter 2001 alone.

AOL believes a chief cause of this stagnation to be its inability to make an impression in the high-speed-connection, or broadband, marketplace. A recent study by Nielsen/ NetRatings found that broadband usage increased 60 percent last year to 16 million subscriptions nationwide. The problem for AOL is that most broadband users access the service through a cable television or phone company.

Industry estimates put broadband penetration by the three largest ISPs—AOL, Earthlink and MSN—at no more than 2 million subscriptions, with AOL’s share of that pie at about 700,000.

“Broadband is the future for AOL,” said Jeff Kagan, an independent telecom analyst based in Atlanta. In terms of a new AOL marketing drive, “they have to hit it out of the park. If they don’t, they’ll end up with the messy game of catching up” to cable companies and telecoms.

Finalists were asked to formulate ways to market the latest version of AOL Broadband, tentatively launching in the second quarter, based not on access quality or speed but on proprietary content. This will likely include features from AOL Time Warner properties such as HBO, Warner Music and People magazine.

The content-based approach “jells well with the overall corporate model,” said Michael Harris, president of Phoenix consultancy Kinetic Strategies.

With the new focus on value-added content, Gotham’s longtime “So easy to use, no wonder it’s No.1” strategy was deemed badly outmoded, sources said. The agency presented new ideas to Short after his arrival, but two days later he fired the shop. (The client apparently also canceled Gotham’s complimentary AOL subscriptions.)

Short has already handed project work to two of the finalists. He tapped BBDO for assignments surrounding high-profile events such as the Super Bowl (for which it placed an AOL spot) and the upcoming Academy Awards. CP+B was brought on to support AOL Moviefone. Short, who declined comment for this story, has said those assignments give the two agencies no advantage in the review.

Short will be making the decision along with his boss, AOL president of marketing Joe Redling, whose opinion will carry equal weight. Other executives sitting in on the presentations will include AOL CEO and chairman Jonathan Miller and vice chairmen Ted Leonsis and Joseph Ripp.

In addition to BBDO and CP+B, at least one other agency, Hill, Holliday, has something of an “in” with the client. Leonsis hired the shop in 1999 to produce ads for his Washington Capitals NHL team. The campaign, tagged “Always intense,” was chiefly led by Marty Donohue, now evp and executive creative director of Hill, Holliday and a key player on the pitch team. The agency handled AOL competitor Terra Lycos for two years before the client’s consolidation with New York’s Ogilvy & Mather last month. Several sources downplayed the Leonsis connection, however, noting that the relationship may have gotten the shop invited but is unlikely to influence the final decision.

Executives at the contending agencies either declined comment or did not return phone calls.

The winner of the AOL account will be under immense pressure to quickly win market share, analysts agreed. “It’s make-or-break time for AOL” in the next few months, Kagan said.