AOL Moves In To Free ISP Market
AOL Europe today launches its free internet service provider under the brand name Netscape Online (see AOL Challenges Freeserve With Free UK Net Access) and is confident that the service can become the UK’s market leader in free Net access. Netscape Online will go head to head with Dixons’ Freeserve, the country’s largest free service provider at present.
AOL will run the free Netscape Online service alongside its paid-for provider, aol.co.uk, targeting the ‘value-conscious segment of UK DIY internet users’. AOL has struck deals with a range of branded content suppliers for the service, including ft.com, the Guardian‘s Film Unlimited, sports.com, Q magazine and Dennis Publishing’s Maxim. As well as this Netscape Online is launching a number of advertising and e-commerce partnerships, some with existing AOL and CompuServe deals and other new partnerships with brands specifically associated with Netscape Online.
AOL is confident that the new, free ISP will not deplete the customer base or attraction of its two other services: aol.co.uk, aimed at mainstream consumers and families and CompuServe, aimed at busy professionals. Andreas Schimdt, president and CEO of AOL Europe, says: “Netscape Online is unique in the subscription-free market. This is the next step in our multiple-brand strategy and provides the best service available to this market segment.”
AOL has also struck a significant distribution deal with Kingfisher, which will see the Netscape Online software being available in nearly 800 hundred of Kingfisher’s Woolworths shops nationwide. The Netscape Online software, available in stores from 1 September, will be co-branded with Woolworths in a move similar to the deal between currantbun.com and supermarket chain Asda.
Neil Bradford, director of Fletcher Research, believes that the distribution deal with Woolworths is very important in the success of Netscape Online. “The key to growth with Freeserve,” says Bradford, “is its distribution [through Dixons’ high street shops]. AOL has got this right with its deal with Kingfisher. Many other free ISP brands are now put together similar high street distribution and co-branding deals.”
Despite this, Bradford is not convinced that Netscape Online will be in a position to drive the free ISP market in the UK: “AOL and Netscape are great brands and it is cooler for consumers to have their ISP branded as Netscape than perhaps Tesco; also they’ve now got pretty good distribution. But they are still not offering anything dramatically special or sophisticated and I can’t envisage them being a driving force for this market now.” Bradford points to the growth in more sophisticated free ISPs which offer share options, free calls and the like.
Fletcher Research, which produced the Internet Strategies: Freeing The Future report earlier in the year (see ‘Fickle’ Net Users Flock To Free ISPs), believes that it will now take a radical proposition, such as free phone calls or free PCs, for a company to overtake Freeserve’s dominant position in the market. Freeserve currently has approximately 1.5 million UK registered users; AOL has around 600,000 users in the UK.
AOL will be promoting the Netscape Online service with an ‘intensive’ advertising, marketing and promotional campaign. The print and online ad campaign begins today, with national TV ads airing from 1 September. The CD with Netscape Online software will also be distributed through direct mail, sampling and covermounts.
AOL Europe: 0171 594 4400