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Melissa Burgess
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Melissa Burgess is Director of Business Development at IMPAQT. She manages all aspects of Business Development activities ranging from partnership development to direct sales initiatives for corporate brand marketers. As a recognized expert in Search Marketing, Melissa has helped develop and execute search strategies for clients in the Retail, Pharmaceutical and CPG industries. You can contact Melissa at Melissa.Burgess@impaqt.com.

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Much Love for AOL

Written on
Oct 19, 2005 
Author
Melissa Burgess  |
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Much Love for AOL

Is it just me or is everyone all of a sudden fawning over AOL?

Frequently written off, AOL has recently crept out of the woodworks to become a courted partner in Google/Comcast and MSN’s battle for Search dominance. The Search stakes have risen, and a Google/AOL merger would put Google out of reach of any competitors within the Search space—unless of course MSN and Yahoo merged (imagine that!).

Here’s what the field currently looks like: Based on Nielsen//NetRatings August 2005 data, Google clocks in at over 2mm searches; add AOL to that mix and you’re out in the stratosphere. But combine AOL and MSN and you’d account for over 933,000 searchers, just 12% shy of Yahoo, which currently registers at 1mm searches. That’s what you call a real race. If MSN truly wants to make a run to stay in the game, now is the time.

So what’s making AOL so appealing for takeover? It’s simple: growth.

On the Search front, year-over-year growth for AOL has far surpassed growth numbers for any of the Big Three. Again according to Nielsen//NetRatings, AOL has over 100% growth from August 2004 to August 2005 in the number of searches conducted via Web Search, while exhibiting a 97% growth rate for that same time period through all Search capabilities on their Site (this included Image, Web, Local, News and Shopping).

Meanwhile, in the same time period, MSN Web Search grew only 20%, with overall Search growth registering at 24%. Given that this was supposed to be MSN’s “breakout year” for Search, it’s surprising to see that growth was relatively minimal when compared to AOL. (However, don’t count them out of the game just yet. With a host of new products and services slowly being leaked to Search marketers and online advertisers, we are expecting to see their search activity continue to rise.)

It’s the evidence of this significant growth on AOL’s part that has no doubt caught the eyes (and wallets) of the likes of MSN and Google. To drive this growth they have silently beefed up their Search results page, offering added features such as Snapshots, Quick Answers and expanded category listings, as well as neat tool that allow you to “clip” results that meet your criteria. In addition, AOL just recently purchased Weblogs, Inc.—which is more than a little reminiscent of Google’s purchase of Blogger.com. (I’m seeing a trend here, folks.)

It all adds up to good planning on AOL’s part: With a steady decline in their dial-up base, the company took stock of their offerings and, seeing a trend in video, rich content and the rise in broadband adoption, reformatted their look and appeal to the younger generation by providing on-demand access to a wide variety of music, movies and streaming concerts (Live8) and video. And those additions make them extremely attractive to any company looking to shore up its position in a quickly diversifying marketplace.

With an AOL acquisition comes a built-in membership base, original content and access to a wide variety of network sites such as Mapquest and Netscape. AOL, through their ties to Time Warner, also understands the value of video, entertainment, music, movies, IM and television. Add that all up and you’ve got a veritable jackpot waiting to be tapped.

For Google, in particular, the deal could be critical: the company has made it quite clear to the public that they want to be more than just Search, and are making a bid to morph themselves into a media company backed by technology and innovation. The acquisition of AOL would open up the market to them for additional ad syndication through AOL’s web properties. Moreover, as the current relationship between AOL and Google accounts for roughly 5 to 10 percent of Google’s earnings (according to Merrill Lynch), Google would loathe losing this revenue stream to a competitor by letting AOL slip through its fingers.

And if that happens, MSN would surely be happy to benefit. It should be interesting to find out whether this one turns into a race to the finish line or a lopsided battle from the start.





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