The Secret of AOL's One-Day Sale Success

Even as AOL faces intense scrutiny surrounding an ongoing SEC investigation into possible revenue misstatements, the company is moving ahead with marketing initiatives designed to appeal to its members and partner retailers. One such event, a one-day sale April 16th that highlighted some of the ISP's retail partners, resulted in at least a tenfold traffic spike for most of the 32 sites involved, AOL said, and a healthy clickthrough rate from AOL's promotional jump page.

Although the sale seemed ripe for affiliate marketing , AOL said it reaped no revenue from the single-day effort, claiming that the event was intended to make retail partners and members happy. But it also represented an opportunity to find out if non-holiday sales could boost traffic. After the reportedly successful results, AOL already is planning to retest its theory that if you put out a sale sign, many click-happy shoppers will come.

So, what is the secret of AOL's success ? It comes down to retailer selection -- which sites were chosen to participate in the sale -- and coordination among the selected sites.

Discount Day

AOL has featured members-only sale opportunities in the past, but they usually have been centered around such holidays as Christmas and Valentine's Day.

Although April is not free of special days, such as Easter and Passover, those occasions are not exactly likely to inspire a shopping frenzy. On the other hand, tax refunds may have done the trick.

Patrick Gates, senior vice president of commerce at AOL, told the E-Commerce Times that mid-April was chosen because it is smack in the middle of a slow retail period. The ISP wanted to see if it could boost traffic to its retail partners' sites and build interest around the event, even though it was not tied to a holiday or a shopping season like the "back-to-school" buying period.

"The shopping area that we have on AOL is affectionately thought of as the AOL mall by us," Gates said. "We have hundreds of retail partners, and we wanted to do this as a way to highlight some of them, the way a mall would promote certain stores in its building."

Setting Sale

To convince consumers to click and spend, the ISP chose its largest retailers, including 1-800-Flowers.com, Banana Republic, Blue Nile, Discovery Store, Electronic Arts (Nasdaq: ERTS), Godiva, Hewlett-Packard (NYSE: HPQ), JC Penney, Neiman Marcus, RedEnvelope and ShopNBC, to participate in the promotion.

Whenever a member jumped from AOL to a retailer's site, welcome messages popped up, informing the shopper of special sale items and the amount of time left until certain offers expired.

Retailers could place their entire site's inventory on sale for members or could choose a certain hour of the day in which deeper discounts would be offered. Some retailers discounted online items by up to 20 percent.

AOL also worked to make a variety of products available, and to make sure stores were not battling each other for the same customer . Therefore, a shopper could buy steaks, diamonds, perfume, watches and chocolate on the sale day -- without having to surf among the retailers to find the best price.

Online Registers Ring

With the big sale behind it (and, thanks to the online world, no clean-up from stampeding customers was required), AOL is calling the effort a success. Perhaps more importantly for the ISP, members and retailers also are praising the effort.

"We saw a very solid increase," Fran Cuomo, 1-800-Flowers.com's director of interactive marketing, told the E-Commerce Times. "We were extremely happy with the results of the sale."

1-800-Flowers is not only AOL's lone fresh flower provider retail partner, but also the ISP's first merchant partner. Cuomo said she felt the sale was akin to a reward for AOL retailers, not to mention a good way to keep members shopping in the future.

According to Gates, other retailers were similarly delighted with the surge in traffic. "From the really strong reaction we've heard back, partners have said that traffic was substantially higher then it would have been on a normal day," he noted. "Members have told us that it was a great selection of companies."

Strategic Thinking

It remains to be seen if such sales can bring new members into the AOL fold, or if the ISP will simply see increased traffic from its already-established membership.

Other one-day-sale efforts by other sites have achieved success in the past. For example, Yahoo held a travel sale a few years ago with Travelocity that increased ticket sales by 70 percent.

However, such marketing techniques still remain little utilized. AOL hopes to change that, and the company already has plans under way for more non-holiday sales.

"This is something we'll probably repeat in key periods of the year," Gates said. "We're going to try and build our promotions to be more like what you see in the retail marketplace, as opposed to the online marketplace."

Competitive Spirit

If AOL does make online registers sing for its retail partners, it will not be surprising if the one-day-sale technique becomes much more commonplace, Jupiter Research analyst Michael Gartenberg told the E-Commerce Times.

"It's an experiment, and we'll continue to see these type of experiments," he said. "If it proves to be successful for AOL, you'll see other ISPs replicating what AOL is doing."

The danger, he noted, is in making sure that such sales do not take place so often that they dilute sale hunters' enthusiasm. "At a certain point, when the bargain price becomes the baseline price, consumers get wise to that."