AOL-TW: The Present Looks Great, But What of the Future?

AOL-Time Warner may be a marketing powerhouse to advertisers who want to reach Internet users at home and work, but as its users gain more Internet experience they may leave for other ISPs, according to a report by Solomon-Wolff Associates.

AOL-Time Warner accounted for nearly one-third of all time spent online in January 2001 in the United States, according to Jupiter Media Metrix.

On their own, Time Warner’s online properties reached 15.7 percent of users at home, but combined with AOL, the merged entity had an at-home penetration of 72.3 percent. While the total usage minutes for Time Warner’s properties amounted to 0.3 percent of all time spent online in January 2001, AOL and Time Warner combined accounted for 32.7 percent.

“The Media Metrix audience ratings indicate that Time Warner has an unmatched opportunity to cut media marketing and promotional costs,” said David Card, Jupiter senior analyst. “Time Warner can now tap into the most time-intensive audience online, providing an opportunity to present content, advertising and services to its customer base at an unprecedented rate.”

According to Jupiter analysts, AOL receives a huge benefit from Time Warner’s presence at work. Media Metrix data found that AOL had a 67.2 percent reach, but that figure increased to 72.1 percent with the addition of Time Warner’s online properties, which include CNN.com, CNNfn.com, and CNNSI.com among others.”

While advertisers and marketers may find the AOL-Time Warner combination attractive, from the consumer’s perspective, AOL-Time Warner may be vulnerable to competition.

A report by independent market research company Solomon-Wolff found that, while AOL continues to be the dominant ISP in the United States (accounting for 25 percent of all consumer Internet customers), AOL’s share of households has declined slightly during the past year. However, because the number of Internet households continues to grow and because many new users use AOL, the number of households using AOL continues to increase.

“AOL is a marketing powerhouse, and it gets new customers when they first get on the Internet,” said Joey Wolff, partner, Solomon-Wolff Associates. “But as users get familiar with the Internet, some begin to try other services. Our report shows that during the past year, only 10 percent of AOL customers switched from other ISPs, while almost 25 percent of all Internet users switched.”

But AOL users may begin to migrate to other ISPs because they are less satisfied with AOL than with several of the top tier ISPs, and AOL is gaining a smaller percentage of switchers from other ISPs than are its competitors. Among top tier ISPs, only WebTV shows more vulnerability to losses in market share than AOL, according to Solomon-Wolff.

The report indicates that the top tier ISPs which have the highest level of customer satisfaction are MSN, Earthlink, and AT&T Worldnet.

According to Wolff, brand switching among ISPs is fairly limited, but it has increased during the past two years. “Our data shows that consumer switching has increased from 17 percent of Internet users in January 1999 to 24 percent in July 2000,” said Wolff. “This is a surprisingly large number considering how much trouble is involved in discontinuing one service and initiating an account with a new one.”

Total Time Spent Online AOL-Time Warner
January 2001
Total Usage
Minutes

(000)
Share of Total
Usage Minutes
AOL-Time Warner 31,954 32.7%
AOL Network
Proprietary and WWW
31,661 32.4%
Time Warner Online 293 0.3%
Source: Jupiter Media Metrix

Subscribe to get your daily business insights

Whitepapers

US Mobile Streaming Behavior
Whitepaper | Mobile

US Mobile Streaming Behavior

5y

US Mobile Streaming Behavior

Streaming has become a staple of US media-viewing habits. Streaming video, however, still comes with a variety of pesky frustrations that viewers are ...

View resource
Winning the Data Game: Digital Analytics Tactics for Media Groups
Whitepaper | Analyzing Customer Data

Winning the Data Game: Digital Analytics Tactics for Media Groups

5y

Winning the Data Game: Digital Analytics Tactics f...

Data is the lifeblood of so many companies today. You need more of it, all of which at higher quality, and all the meanwhile being compliant with data...

View resource
Learning to win the talent war: how digital marketing can develop its people
Whitepaper | Digital Marketing

Learning to win the talent war: how digital marketing can develop its peopl...

2y

Learning to win the talent war: how digital market...

This report documents the findings of a Fireside chat held by ClickZ in the first quarter of 2022. It provides expert insight on how companies can ret...

View resource
Engagement To Empowerment - Winning in Today's Experience Economy
Report | Digital Transformation

Engagement To Empowerment - Winning in Today's Experience Economy

1m

Engagement To Empowerment - Winning in Today's Exp...

Customers decide fast, influenced by only 2.5 touchpoints – globally! Make sure your brand shines in those critical moments. Read More...

View resource