The Decline and Fall of AOL

The trashing of a money machine and a great brand

July 2006 By Denny Hatch

multipage

The Magic of the Two-line Address
When I was growing up on Long Island, the mailman frequently would deliver an envelope addressed as follows:

Mr. Alden Hatch
Cedarhurst, New York

The letter could come from anywhere in the world and in just two lines—six words—reach my father out of more than 2 billion people on the planet. This never ceased to amaze me.

Every son hopes to outdo the father. So when I became a member of AOL, I had a one-line address: dennyhatch@aol.com.

Think of it! In this horrendously complex world with 6.5 billion people, I am reachable with one line—17 characters and a dot—from anyplace on earth and outer space (if an astronaut cared to e-mail me) instantly, 24/7.

How AOL could screw up this incredible brand I find as amazing as my one-line address.

The Genius of Janice Brandt

In 1993, Internet access was essentially a three-horse race. The text-heavy CompuServe was owned by the tax accounting people H&R Block and had about a million members. So did the cartoon-oriented Prodigy, a joint venture among CBS, Sears and IBM. The longshot was America Online (AOL), with its elegant Graphical User Interface (GUI), chat rooms and exclusive community-building techniques, that had been taken public the prior year by founder Steve Case; he had just under 250,000 members and was doing about $40 million a year in revenue. One advantage Case had over the competition: The name, America Online, says what the service is; Prodigy and CompuServe could be just about anything.

Enter Jan Brandt, a direct marketing wizard with a solid grounding in continuity marketing that helped take AOL to more than 22 million members. She did it working hundred-hour weeks in which she mounted between 2,000 and 3,000 marketing tests a year. Her strategy was so wildly successful that it enabled AOL to acquire the vast Time Warner empire as well as its early rival, CompuServe. In my opinion, Janice Brandt is one of the most influential women in American business—right up there with Martha Stewart and Oprah—and she did it in just seven years by putting her personal life on hold.

I don’t think to this day that Steve Case understands what Jan Brandt accomplished for him. My bet is that he assumed AOL was so good that it would have sold itself, with or without Brandt.