AOL Offers Free Advertisement Based Service

Today every major company has their own business website, and many small businesses also have a website to advertise their services. Not every individual who has Internet access has their own personal website, but with the newest web technology, known as a ‘blog’ anyone who wants a website can host one for free. There are many free blog sites available today, and the most popular by far are Blogger.com and WordPress.org. This blog was created to inform the reader about the current forms of Online Advertising and also where the future of Online Advertising is going. My name is Chris Rubacky and I graduated in 2005 from Washington College with a B.A. in Computer Science and I am currently employed at HostMySite.com as a Web Server Analyst. This blog is also part of a project for a class I am currently enrolled in at the University of Delaware. The class is titled BUAD477: Information Technology Applications in Marketing. I decided to take this class because of my personal interest in Internet Marketing, and also because I am currently developing an Online Advertising portal of my own known as AdverLize.com, which will be deployed sometime in the near future. Online Advertising has gone through many changes in the few years that it has existed. My plan for this blog is to prove to you that it is a crucial part of the Internet and is the future of all forms of advertising.

Topic #1: AOL Offers Its Service for Free to Broadband Users

The first topic I want to discuss is the fact that America Online, also known as AOL, is now offering its services completely free to users that have an Internet connection from another provider. This was speculated on by Forbes Magazine in this online article: Forbes Article

This usually means that the subscribers have some type of broadband access, such as a cable modem or DSL. But how can AOL afford to offer its services for free? The answer is Online Advertising. For many years AOL was the largest ISP in the US, but since their services were based on dialup modem access, they were left in the dust by the broadband revolution. Today cable and phone companies dominate this market because they provide the mediums for broadband access. Subsequently, AOL has completely rewritten their business model so that they are primarily focusing on Online Advertising for revenues. This article questions whether or not AOL’s revenues will increase due to the new free, ad-based online service. My assumption is that this strategy will bring AOL back into the ISP picture, at least for a few years to come. My assumption is based on the fact that AOL still has a large subscriber base that has kept the service for email, despite the fact that they now have broadband Internet access. AOL has always had a large stake in the Online Advertising market because of their large audience. They are now the third-largest online advertising network, and in the second quarter of 2006 their advertising revenues grew by 40 percent, but I believe they had this planned for a while now. In 2004 AOL purchased Advertising.com for $435 million, the largest third-party advertisement network. The Washington Post wrote about this purchase intially in this article: Washington Post Article

AOL’s CEO, Jonathan F. Miller was quoted: “Online advertising is showing very strong growth across the industry, and the acquisition of Advertising.com underscores AOL's determination to strengthen its competitive position. Advertising.com has built a profitable, scalable and highly attractive business. This acquisition is a strategic move that will bolster AOL's advertising business, building on the strides made in the past year.” Advertising.com hosts ads that supposedly reach 70 percent of all US Internet users. AOL’s acquisition of Advertising.com was definitely a strategic step towards their now free, ad-based service. AOL now has a portal that advertisers can go to register to their advertisements and have them hosted by AOL’s service: http://advisor.aol.com/

Their advertisement service allows advertisers to have their ads strategically placed within their system to reach a certain audience. This is known as ‘Target Based Advertising’. They also have many different types of ads that advertisers can choose from. The most common being a banner based ad with both static and dynamic content. However, they now offer some new forms of ads, including AIM based ads and floating ads that ‘float’ in an invisible layer on top of the page.

Will AOL’s new advertisement based business model turn them into the online giant they once were? Probably not, but in my opinion, this is a step in the right direction for AOL’s future. Advertising is everywhere on the Internet, but the tricky part is getting your particular ad seen by a certain audience. For the first time in 13 years, AOL has once again revolutionized the way people view the internet.