Interactive Quarterly: IF/THEN

AOL subscribers should get privileges. Membership has its privileges. As anyone who has seen even the smallest amount of advertising in the last few decades knows, the above is a long-time tagline for American Express. For the purposes of this argument, the exact words are less important than what they convey: a bit of status and entry into a club offering exclusive benefits, such as special offers and discounts. In fact, the concept has been marketed so effectively over the years that it is easy to forget that being accepted for an American Express card is not very difficult and that the privileges conferred upon this not-so-exclusive club usually take the form of bill stuffers and telemarketing calls, the detritus of the need for marketers to sell. Unfortunately, in its recent attempt to telemarket to its 8.5 million subscriber base, America Online got these particular dynamics reversed. As a result, when word leaked in late July that the online service planned to give out its members' phone numbers to outside companies, members were outraged. (It should be noted that AOL maintains that it only planned to offer goods and services to AOL members on behalf of pre-screened outside companies.) In a world where perception is reality, the semantics may not matter; rather than feeling like members of the privileged online class, AOL members felt hoodwinked, their trust violated. While the outrage is understandable, AOL's leadership position in the online industry means it is continually the canary in the online coal mine. If AOL makes a strategic error, its bungle is amplified not only by its massive subscriber base, but also by the power of each member's keyboard. Reporters (and attorneys general) who follow the online world have long been accustomed to receiving email from AOL members and people from other online constituencies who take it upon themselves to examine, and publicize, every perceived slight to their cyberspace hegemony. Therefore, the ease-of-use of computer keyboards makes AOL's ability to engage in common, if ethically questionable, practices such as renting its members addresses much more difficult. When have you ever seen an incensed cabal of American Express members storm the company's headquarters, demanding that it alter its cardholders' terms of service? Vociferous user base aside, marketers of established products may wonder why AOL would so carelessly tamper with the relationship it has with its subscribers. But the furor over stepping up its marketing of goods and services has to be viewed in the context of the online industry. Since taking the leap almost a year ago to offering its service for $19.95 per month for unlimited usage, AOL has been engaged in a struggle to prevent a free fall on its margins. With subscribers paying so little, no matter how much time they spend online, AOL has been busily extracting payment from wherever it reasonably can, putting advertising in chat areas and charging online rent to AOL merchants. The telemarketing fracas is simply another outgrowth of that. But AOL's standing as bruised and battered online pioneer obligates the company to tear a page out of the marketing annals of companies such as American Express. As the power of the online consumer grows, AOL is going to have to turn membership into the very privilege that, say, Saturn car owners perceive it to be. As the marketing of goods and services on AOL increases, the buzz out of the company's Dulles, Va., headquarters indicates that much of what the company plans to sell is special AOL-branded product, provided by outside companies such as long-distance provider Tel-Save Holdings, which the service struck a $100 million deal with in February. More important than what AOL sells is how the products will be sold. The ubiquitous pop-up screens that greet AOL users when they log on have become online wallpaper for many users, who hit the "cancel" box before they even know what's being peddled. Fortunately, as part of the new push, the company says it does plan to move toward a more coherent and intelligent way of marketing such special offers. Specifics, such as the exact name of the new plan, have not yet been finalized. By this fall, however, AOL will have started to present much of what it offers as a package of special member privileges. Too bad the best tagline is already taken.

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Interactive Quarterly: IF/THEN - Members Only

Catharine P. Taylor

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Catharine P. Taylor