How to Reach 650,000 Affluent Consumers for 8 Cents
a Day
The commercial on-line services offer a rich mix of
opportunities for the direct response marketer,
from publishing simple classified ads to opening
your own store in a Mall. In this section we'll
describe the opportunities offered by each of the
commercial networks.
The Major Players
There are 4 principal on-line networks who target
consumers: America Online, CompuServe, GEnie and
Prodigy. Each has a distinctly different
personality, its own unique emphasis, and its own
mix of users.
In the paragraphs that follow, we will describe
each of these services. We will attempt to identify
their strong and weak points, and the advantages
each might offer to us all as Direct Marketers.
America Online
America Online (AOL) is a true descendant of the
original electronic "Bulletin Board" systems. The
tone is quite non-commercial and matter-of-fact,
offering the usual news services, stock price
quotes, special interest forums and free software.
The service currently has about 220,000
subscribers, but it is carrying on an aggressive
campaign to acquire new ones, with offers of as
much as 10 free connect hours.
AOL offers a forum area which it calls the "People
Connection". The interests expressed on the People
Connection indicate a strong bias toward sexual
(and especially gay) issues. Dropping into one of
those forums ("rooms", as they're called on AOL)
brought an almost immediate personal message, sent
by a male cross-dresser who was looking for
companionship. (Don't write AOL's People
Connection off entirely, though. In a later
section, we'll show you how you can use it to good
advantage.)
Classified advertising on AOL is free, and it
includes a Business Opportunity category. Watching
the activity over the period of several days gave
us a hint why the service is free: there were
almost no responses to the ads! In fact, some of
the "ads" on the system were actually complaints
from customers, warning others to stay away from
certain vendors!
AOL offers a Shopping Mall, but it is quite
limited. In addition to being able to make travel
arrangements, users can shop for flowers, order
subscriptions to selected magazines, purchase
office products from Penny Wise office products,
and purchase both computer hardware and commercial
software.
Preparing this report put us in contact with these
people for the first time. In interviewing their
marketing people, we immediately got the impression
they don't have a firm grip on who their customers
are and what they want. One person, when pressed,
told us she hadn't seen any new vendors added to
the list on the Shopping Mall in the year she had
been with the company. Another person described
the Mall as "in transition".
Although this may at first sound quite unpromising,
there is one bright spot: one of the more popular
features on the system is their educational area.
This section offers a wide array of adult education
courses, ranging from screen writing to origami
(don't ask us - they couldn't tell us how this was
taught by computer instruction). Fees are charged
for courses, and they're not the type of courses
where participants expect educational credits. If
you have educational materials, you may well find
an opportunity here.
CompuServe
CompuServe Information Services (CIS) is probably
the granddaddy of the commercial on-line networks.
It was started in the mid-1970s, and then later
acquired by the H & R Block organization. They
claim one million users, but their most current
printed documentation shows only 650,000.
The diverse interests of these users is reflected
in the width and depth of the CIS forums. There are
nearly 200 forums, covering just about any interest
you can name, from Photography to Working at Home.
Unlike America Online, CIS definitely knows who
their users are and what they want. Network
television would have us believe that everyone who
uses their computer to access information sources
is a pimple-faced 16-year old wearing a T-Shirt and
living in a fantasy world. If that's the impression
you have, you're in for a shock. The CIS subscriber
base is 91% male, the median age is 42 years, 96%
of their audience has at least some college
education, they have an average household income of
$93,000, and 92% of them hold executive,
managerial, professional or technical positions.
The CIS audience is definitely slanted toward the
IBM PC and compatibles. While only 24% of their
users use Macintosh computers, 90% use PC
compatibles.
Here are some interesting statistics about
subscribers and the members of their households:
94% own at least one VCR; 42% own a camcorder; 17%
own a big-screen TV; 62% own a U.S.-made
automobile; 55% own an imported auto; 32% have
cellular telephones; 26% have their homes protected
by an electronic security system; 27% own a fax
machine; and a whopping 71% subscribe to cable TV
(which by now should come as no surprise).
Let's put a finer point on this. In the past 12
months, 24% of the subscribers have bought
collectibles; 47% have purchased hobby equipment;
46% paid for sporting goods; 19% bought gourmet
cooking equipment; 34% have purchased jewelry; 34%
bought one or more toys; 38% have invested in
stocks, mutual funds, or certificates of deposit;
38% bought gardening equipment; and 53% purchased
automobile accessories.
Finally, let's look at how their purchases are
made. In the past 12 months, 85% purchased at least
one item through a catalog; 70% purchased through
direct mail, and 90% purchased at least one item by
one of these two methods. As to repetition, 38%
made 3 to 5 purchases, and 23% purchased 10 or more
items through catalogs or direct mail offers.
Electronic Mall
CIS offers several opportunities for Direct
Marketers. At the high visibility end is
participation in the Electronic Mall. There are
currently 125 shops in their Mall, and it is
definitely growing (it added 4 new vendors in
January alone).
The mix is very interesting, and you'll find that
it tracks the marketing trends identified earlier
in this report. There are 15 "departments" in the
Mall: Apparel/Accessories, Arts/Music/Video, Auto,
Books/Periodicals, Business/Finance,
Clubs/Memberships, Computing, Gifts/Flowers/Gourmet
Foods, Health/Beauty, Hobbies/Toys/Pets,
Information Services, Merchandise/Electronics,
Office Supplies, Sports/Leisure, and Travel
Vacations.
As you would expect, there are several companies
selling computer hardware and software, primarily
for PC compatibles. There are several companies
selling books, including Waldenbooks. There are
investment companies, including Dow Jones, Dreyfus
and Twentieth Century Mutual Funds, and (of course)
H & R Block. Image advertisers like Buick, Ford,
Lincoln, Mercury and Volkswagen each offer
information on their automobiles. Subscribers can
purchase suits from Brooks Brothers, shirts from
Paul Frederick, vacation packages from The Travel
Club or Windstar Cruises, flowers from Walter Knoll
Florists, gourmet food from Omaha Steaks, and just
about anything from Hammacher Schlemmer, Sears or
JCPenny. You can even start your own corporation
on-line with the Company Corporation, the company
founded by legendary direct marketer Ted Nicholas.
This Electronic Mall offers a selection very much
like a conventional shopping mall. CompuServe's
statistics tell us that out of 100 times a user
enters the Mall, there will be 4 purchases made.
And the average purchase is $65 - $70.
Shoppers place orders by responding to offers in
typical E-Mail fashion, leaving credit card and
shipping information. Vendors pick up their orders
as E-Mail, get credit card authorizations, and ship
directly to the customer. In the case of
information products, vendors have the option of
storing them on CompuServe's computer in Columbus,
Ohio; a command from the vendor will send the
document as E-Mail to the customer. Since CIS
services span the entire globe, this process can
take place anywhere in the world. This is the
scenario presented at the beginning of this report.
Opening a store on the Mall is not inexpensive, but
it can certainly be profitable. The minimum annual
fee is $10,000, and there is a 2% charge on all
sales. For this minimum fee, you can have as many
as 100 products in your catalog (with complete
descriptions of each), or up to 500 products
without descriptions. You can update your catalog
twice a month, and you get a complimentary
subscriber account with up to 20 hours of free
connect time per month, so you can pick up your
orders.
CompuServe Magazine
CompuServe publishes a monthly magazine, and each
subscriber receives a free subscription. The
magazine is in an 8-1/2 x 11-inch, glossy,
full-color format, with 50-60 pages in each issue.
The magazine offers both display ads and classified
ads.
Current display ad rates run $12,760 per page in
the North American edition, based on a single
insertion in black and white. A 50% discount is
available for display ads which appear in the
"Direct Connection" section at the back of the
magazine. Standard discounts are available, and
there is a special participation program for Mall
vendors that give what amounts to a limited 50%
discount.
If these rates are a little rich for your blood,
there is another possibility: classified ads. Each
ad is approximately 1" by 2-1/4", with a line
border, and provides enough room for 30-50 words.
The one-time rate is $400, which drops to $200 for
12 insertions.
Promotional Mailings
Four times a year, CIS mails a special
direct-response packet to its users. It arrives
with an issue of CompuServe Magazine, enclosed in a
poly bag. You can participate in this ride-along
program, and get your mailing piece enclosed with
the packet.
List Rental
CIS rents the mailing list for the magazine at
reasonable rates. Selections include recency,
state, SCF, ZIP code, sex, home vs. business
address, computer type, and on-line use category.
You can easily target people in any one of 200
interest categories!
On-line Classified Ads
CIS offers classified ads at very affordable
prices. As in the Mall, connect charges are
suspended while subscribers are browsing through
the classified ads, giving you some of the
advantages of the more expensive Mall locations.
Categories for classifieds include computer
hardware and software; business services and
investment opportunities; travel; cars and
recreational vehicles; electronics and
collectibles; and announcements of events.
The rates are $1.00 for 1 line (up to 70
characters) for 1 week. Discounts are available,
and if you decide to keep your ad in place for a
26-week period, the total is $14.30. That means
your ad can be available to 650,000 upscale
consumers for less than 8 cents a day.
Placing classified advertising couldn't be easier.
While on CIS, you enter the classified area, select
"Submit an Ad", and choose the category and sub
category that best match your product. You then
type in your ad and it will be submitted to CIS
(does this sound a little like E-Mail again?). The
ad will be reviewed, and then posted within 24
hours. The cost will be billed to your on- line
account.
GEnie
GEnie was started about 10 years ago by General
Electric's Information Services division. Up to
that time, GE Info Services had been providing
commercial communication services like electronic
bank transfer networks and electronic mail for
major corporations. In 1985, they decided to try an
experimental move into the consumer market. That
move was a successful one, and GEnie (now its own
division under General Electric) currently has
approximately 375,000 subscribers.
On the whole GEnie is much like CompuServe, and it
offers most of the same opportunities.
GEnie's electronic Mall has 40 - 50 stores on-line,
offering everything from computer hardware and
supplies to gourmet food. The Mall is operated by a
third party, Dunhill Management in Stanford,
Connecticut. A space in the Mall will cost you in
the range of $5,000 - $10,000 a year.
Like CIS, GEnie publishes its own magazine, which
is distributed every other month to its
subscribers. Advertising space is available, with
rates comparable to those of CIS.
While CIS is heavily made up of IBM PC compatible
users, GEnie has traditionally attracted more
Macintosh users. Since this is a much smaller
market, GEnie has done well to collect the large
subscriber base it has. And there are 3 reasons
that's a potential benefit to marketers of
information products: (1) Macintosh owners have
purchased a more expensive computer than its PC
counterpart; (2) a large percentage of Mac sales
have been to the "Yuppie" crowd; and (3) many of
the Mac sales have come through Apple Computer's
aggressive marketing through the educational
system.
That means many of GEnie's users are well-educated,
upwardly mobile consumers who are looking to
further their knowledge. If you have an information
product to market, GEnie's audience may be the one
you've been looking for. This is borne out by the
fact that several vendors offer newsletters
on-line. If you have a newsletter, this may work
well for you. You might also consider creating a
"junior" electronic version of your newsletter to
use as a prospecting tool for your newsletter, book
or course. You could make the junior version
available at little or no cost to GEnie
subscribers.
Prodigy
We've saved perhaps the most interesting for last.
While the other 3 services are pretty much
"lookalikes", Prodigy is truly unique. It does not
cater to corporate America; it is the only totally
consumer-dedicated service.
Prodigy started out about 10 years ago as a service
called Trintex, a joint venture of CBS, IBM and
AT&T. CBS later went into bankruptcy, and Sears
took its place. If you can imagine what a team
consisting of a company specializing in
communications, a company expert in computers, and
a company with a long, successful history marketing
consumer products by mail order would come up with
for an on-line service, you have Prodigy.
AOL, CIS and GEnie basically offer "text only"
display. That means what you see on your screen is
purely type - no pictures, and little (if any)
color. Even with the newest software available,
users are pretty much looking at a straight text
display, much like reading an 80-column wide
newspaper, without any photographs or
illustrations.
Prodigy, on the other hand, provides the software
its subscribers must use to access the service. Due
to this fact, Prodigy can perform feats the other
networks can't do, even if they wanted to.
Every screen the subscriber sees is graphics, in
full color. From the moment a user logs on until he
logs off, he is presented with one graphic after
another - and one advertisement after another. The
opening screen lists the hot news topics of the
day, and lets the user read more detailed
information on the topics by clicking buttons
beside them. But among topics such as dictatorships
being overthrown and fruit crops being destroyed,
you'll find one or two "advertorial" topics, where
people can read more information about new products
or services being offered by vendors.
The bottom one-fourth of the screen is devoted to a
"flip-chart" commercial message. While the user is
on-line, this message changes about once every
minute. From time to time "one liner" ads will
appear across the top line of the screen. And many
lists that offer selections will include an option
to get more information on a particular product or
service. All in all, it makes late- night
programming on WGN television look tame by
comparison.
But consider this: Prodigy currently claims
2,000,000 subscribers in 49 states (it's not
available in Alaska) who pay $15.00 a month to use
their service. Two million subscribers who expect
to be pitched on a minute-by- minute basis, and who
actually pay for the privilege!
Like the others, Prodigy offers the basics:
electronic mail, Dow-Jones reports with 15-minute
delays, airline schedules and the like. One
distinct difference between GEnie and Prodigy:
while GEnie has somewhat of a bias toward the
Yuppie, Prodigy is squarely aimed at Joe Six-Pack.
Prodigy's major areas of emphasis are finances and
sports.
The Mall has approximately 180 merchants, with the
usual spread of products. As you might guess, Sears
has a prominent shop on Prodigy - but so does
JCPenny. Subscribers can join book clubs, get
information from the American Cancer Society,
subscribe to magazines, buy concert tickets, or
find their nearest car dealer.
Targeted Direct Mail
The most unique aspect of Prodigy is probably its
targeted direct electronic mail opportunity. For 50
cents apiece, you can send electronic mail messages
to a highly targeted group. The various selects let
you choose geographic area, age, special interest -
just about any demographic or psychographic mix you
want to choose.
Once you've prepared the message (up to 4 screens
full) Prodigy will send the messages all at once.
The messages arrive in the subscriber's electronic
mailbox within 24 hours, where they can pick them
up like any other piece of E-Mail.
Compared to first class delivery of a printed
direct mail offer, 50 cents is a bargain. The
problem is that Prodigy makes it difficult for the
"little guy" to use the system, or to test offers
without spending some serious money. Their minimum
mailing is 20,000 names, and there is a one-time
fee of $5,000 for preparing the screens for you.
That means $5K every time you want to change your
copy for a test - and a minimum investment of
$15,000 to get into the game. But for the right
offer, this type of targeted communications could
be dynamite.
Classified Ads
Here is an area where Prodigy outshines their
competition. Like their competitors, they offer
classified ads at greatly reduced rates. But in
this case, there are some definite advantages.
Since Prodigy subscribers pay a flat fee per month
and they are not being charged anything extra while
they are reading classified ads, they can take
their time and read in depth. And since other ads
keep appearing in the lower part of the screen,
users are encouraged to stay on-line as long as
they wish. Anyone reading your ad can respond by
clicking a button on their screen and writing you a
message.
While the classified ads on other systems are
purely text, ads on Prodigy take on some of the
qualities of a display ad. Although you can't
include graphics in your text, there are frequently
graphics on the screen, and your readers see your
ad a pageful (or in this case a screenful) at a
time. The first screen is 7 lines high by 40
characters wide; additional screens are 10 lines by
40 characters, with a limit of 6 screens per ad.
The classified system is actually operated for
Prodigy by TelePublishing Incorporated, a division
of Phoenix Media Communications Group, based in
Boston, Massachusetts. To place an ad, all you need
to do is compose your ad while you're logged on to
Prodigy. It will be reviewed, and if approved, your
credit card will be charged for the ad, which will
be on the system within 24 hours.
Ad rates are significantly higher than those on
other systems, but still well within reach.
Classifications are broken down into two areas,
labeled Class 1 and Class 2.
Class 1 includes autos, boats, cycles, books,
audio, video, travel, vacation, hobbies,
collectibles, items for sale, miscellaneous, health
and fitness, positions wanted, gift ideas, sports
and real estate. A single screen ad is $45 for 14
days, with discounts for 30, 60 and 90 days. The
$203 rate for 90 days calculates out to $2.26 a
day. Additional screens get a 10% discount off the
first screen rate.
Class 2 includes business opportunities, business
services, career services, education, computer
software, computer hardware and help wanted. Rates
for these classifications are significantly higher,
because of their perceived value. (I'm sure by now
that you've gotten the picture that Prodigy is run
by some very sharp marketing people who know what
they're doing.) A single screen will cost $75 for
14 days, or $338 for 90 days. The 90 day rate
equates to $3.76 per day. Additional screens get a
15% discount.
As you might expect, under the Business
Opportunities classification you can find ads for
just about every multi-level marketing (MLM) offer
on the planet. There are countless ads written by
Joe Six-Pack, selling his boat, outboard motor or
back issues of Playboy. You can find some of the
most poorly written ads you've seen in your life.
But you can also see the hand of some very savvy
direct response marketers who have already begun to
mine the gold in electronic classifieds.
On a recent tour of Prodigy, we ran across someone
taking a diet habits "survey". All you had to do to
receive a copy of the survey was respond to the ad.
Of course, when the user responds to a classified
ad, you only get his "electronic" address on the
system. So the survey asked for a physical address,
to send the printed survey form. You can ask the
respondent to reply to your offer in any way you
like - by sending a message to your electronic
mailbox, to your business phone, an 800 service, by
Postal Service or whatever.
This is a nearly perfect environment for selling a
product - especially as a two-step. Imagine what a
well-written lead-generating ad can do on a system
like this. An ad like
FREE REPORT reveals for the first time how to lose
20 pounds a month, without giving up the food you
love. Request your free copy - leave your name and
mailing address.
could go right through the roof! There are very few
well-written ads, and those that are, really stand
out.
As direct response marketers, we all want to make
it as easy to reply to our offers as possible. What
could be easier than this? They don't have to fill
out a card. They don't have to go to their mailbox.
They don't even have to pick up the phone. All they
have to do is click a button on their screen!
Prodigy offers an interesting mix of services. If
your budget can stand the strain, you can blitz
your audience by appearing nearly everywhere they
go on the system.