AOL and Bebo? You serious?

By Mickey Alam Khan

March 17, 2008

Mickey Alam Khan is editor in chief of Mobile Marketer

Dry eyes and common sense: both were missing last week when AOL agreed to pay $850 million for online social network Bebo. Some commentators even justified the deal for its mobile benefits. Please!

Let’s first have some perspective. Here’s a company that at one point was a parallel Internet, had the most number of subscribers as the leading online service provider, had the best instant messenger – still does, have to admit – and had the cheek to buy the world’s largest media and entertainment company.

And now AOL is on the skids, and has been for the last few years. The company suffers from a complete lack of strategy, direction, reason for being, you name it. It ditched a model where people paid for its service to one supported wholly by advertising – even as it was shedding users, or as they used to say, eyeballs. 

There’s no reason to feel sorry for AOL. Not when a superior service and competitor Yahoo is under threat of absorption from Microsoft, another online colossus seeking an indomitable position in the Internet pantheon.

It may yet be that Yahoo will become a subsidiary of a more stable company such as Microsoft and the market may benefit or not. But at least Microsoft is admitting it needs the Internet – and even the mobile Internet’s – No. 1 media brand.

But for AOL to spend that kind of money on a social network? MySpace and Facebook have an unassailable lead in the United States. What good would that do AOL, unless it wants to dominate the British market, where Bebo is a leading player?

Where’s the focus?
Executives at AOL need to ask themselves: What does AOL stand for? Is it a portal, an ISP, an online advertising tools provider with its Platform-A suite of services and sites, an IM application, a media company? What’s the one word that comes to mind when you think of AOL? ISP. Another word? No, make it three – missed the boat.

With that kind of money, and given the general direction of consumer use of technology, AOL could have decided to become the dominant player in … mobile. Yes, mobile. AOL already owns Third Screen Media, one of the leading and oldest mobile ad networks. It also owns Advertising.com, another respected online ad network.

So let’s play high-priced consultant to AOL’s board. What would you suggest? The market for a fantastic mobile portal is open. AOL is in fourth place currently in Nielsen’s ranking of the top mobile Internet brands. Yahoo, Google and MSN hold the first three spots, in that order. But they’ve got to keep an eye on their Internet lead, too.

What the consultant would suggest is this: ditch the online aspirations and devote yourself wholly to becoming the No. 1 mobile player. Maybe this time the consultant isn't taking your watch and telling you the time.

Yes, take that $850 million and make sure you have the best mobile portal, the best mobile email, the best mobile IM, the best mobile text messaging service, the best mobile news delivery, the best mobile ad network, the best mobile wallet for transactions, the best partner to the six leading wireless carriers, the best mobile service for the consumer. In short, be the best mobile portal. 

A little bit of hyperbole there and a bit of excitement too, but imagine the possibilities.

The mobile ecosystem is just forming as a viable marketing, media and commerce marketplace. This is the time not just to place the chairs on the deck, but to own the deck itself. If you’ve got money to throw, aim well, aim high and aim smart.

The future of online is mobile. No two ways about that. One hears these pronouncements that mobile advertising is a year or two away from happening. Bunkum! Don’t buy that. They said the same thing about the Internet in the late 1990s. The critics stayed outside the ring and the smart ones were inside, trading punches for a prize worth fighting and winning. Some lost, some won, but that’s what a market economy’s about.

Year One for mobile marketing was 2007, when Procter & Gamble Co., Coca-Cola Co., CBS and other Fortune 500 brands earmarked small, but psychologically significant budgets for the channel. The consumer is mobile and marketers are catching up. Watch what happens this holiday season.  

AOL was a pioneer in the early 1990s and has easily earned its spot in the history books. It’s got another chance now. It should take a bigger bet on mobile, and ally with the carriers, service providers and advertising agencies to help create a brand that marketers feel comfortable working with and that consumers can trust. This is not the time to leave money on someone else’s table.