AOL Tears Down Garden Walls

AOL is getting a major facelift.

Having fallen far behind competitors such as Google, Yahoo and, to a lesser extent, Microsoft’s MSN, AOL — a division of media giant Time Warner — has launched a host of new services and content initiatives in a bid to close the gap in the online advertising game.

The first new feature allows users to access multiple e-mail services, including Google’s Gmail, Yahoo mail and MSN’s Hotmail, all without leaving AOL.com. The hoped-for effect is that the number of users coming to AOL will both increase and stay at the portal longer, ultimately driving up both Web traffic and online advertising revenue.

More Content, More Users, More Ad Dollars

“The general aim that Time Warner has for AOL is for it to be as broadly attractive to consumers as possible,” David Joyce, an equity analyst with Miller Tabak & Co., told the E-Commerce Times. “They’re trying to sell advertising now, not dial-up subscriptions. The more they can latch onto other areas where consumers go online, the better chance they have for click-throughs and unique user metrics they can sell advertising around.”

The move to revamp the AOL Web site is the latest in a series of initiatives taken by the company to separate its content and online ad business from its flagging dial-up Internet access business, Joyce said.

“The two businesses are pretty much fully separated at this point, operationally and financially,” he noted. “It’s the hope of investors that Time Warner sells off the access business or merges it with EarthLink’s.”

Though AOL dominated the Internet in terms of Web traffic and subscribers earlier this decade, it was late to the broadband access segment. Many of its current challenges are a result of missing the broadband opportunity, Joyce said.

In the Works

AOL isn’t limiting its new look to e-mail aggregation.

The portal debuted a new navigation bar that offers quicker access to popular content sites, such as entertainment and celebrity gossip site TMZ, StyleList, ParentDish, WalletPop and Asylum.Over the next eight weeks, AOL will also introduce new features that enable users to personalize their AOL pages by allowing them to access content from popular third-party social networking sites such as Facebook.

Users will be able to get a bird’s-eye view of status updates from their friends on sites like Facebook through a new “keyhole” box on AOL.

Lost Promise

“AOL is trying to make itself more relevant to its users by integrating into the most popular social networking sites and e-mail services,” Laura Martin, senior media analyst at Soleil Securities, told the E-Commerce Times. “This is an example of AOL trying to regain its lost promise of market dominance. It was first to the market and had a huge presence back in the early 2000s. But all these sites have started since then and become much more popular.”

Although the new moves represent a step in the right direction for AOL, the portal’s execution track record is not as good as some of its competitors, according to Martin.

“They squandered a lot of opportunities,” she said. “Take e-mail, for example. AOL did not provide as much [storage] as Google and Yahoo, and it wasn’t as easy to access as Yahoo or Gmail.”

Miller Tabak’s Joyce thinks AOL could be successful in its latest bid to reinvent itself.

“They have the potential to be successful,” he said. “They’re late to the game, but they’ve got a big parent company in Time Warner behind them, so they’ve got the incentive to get the business turned around.”

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