In the early days of home internet, there was one company that dominated the new industry: America Online or AOL.
Depending on your age, you may remember those AOL discs showing up everywhere. From magazines to sporting events, to inside your mailbox; AOL dominated the market.
It turns out this was one of the most effective campaigns ever. And it was all thanks to one woman who took a unique approach to marketing.
Who Was Jan Brandt?
Brandt started out in educational publishing and insurance sales. She then become vice president of marketing for AOL in 1993.
The internet was brand new to people, and even the concept of having a computer in your home was still somewhat foreign.
What could you do with this thing besides play games on it? And why would anyone need to go “online?”
Brandt’s job was to grow AOL and increase the user base. The company was in the tough position of giving in and being acquired by Bill Gates — or try to go toe-to-toe with him.
Going toe-to-toe would turn out to be a smart move.
There were several internet providers out there and the big decision Brandt made was not to promote why theirs was better — but to educate people on why they needed to be online.
In the book How the Internet Happened by Brian McCullough, Brandt talks about the early focus groups for AOL.
People in the group barely knew what a computer could do, let alone what going online was.
The participants would pick up a mouse and move it in the air. Others would place it on the ground and use it like the pedal on a sewing machine.
Brandt knew she had her work cut out for her.
Getting Into People’s Homes
AOL had finally put together a great service. Their platform was much more user-friendly than the other internet service providers.
They used modern and pleasant graphics, you could send pictures, and above all: the focus was on interaction and chat.
You could now go “online” and search for anything you wanted to. Anyone could now “email” friends and family members from the other side of the world.
You could chat with people in real-time on a computer.
Common stuff now, but pretty revolutionary at the time. And AOL made it easy — and fun — to do.
The product was ready, but they had to get it into people’s homes. This way, AOL would sell itself.
There was no downloading through a website, or connecting to it via Wi-Fi: AOL had to be installed with a disc.
Brandt had a background in direct mail campaigns and came up with the idea to just give their product away for free.
This was a massive risk for the upstart company. AOL would spend $250,000 to mass-produce a ton of trial disks.
Starting in the spring of 1993, AOL would send out the free disc wherever they could.
The success was immediate.
The response rate to the campaign was 10%. If you’ve worked in direct marketing you know that this is an extraordinary result.
This 10% was people who took the free disc; installed it on their computer; found out how great it was; and signed up for the full version with a credit card.
The consumer was doing all the work.
Growing the Campaign
The 10% response rate was just the start. Brandt went all-in on the marketing campaign. The goal was to get an AOL disc into every home in America.
Computers were becoming more commonplace in people’s homes and AOL wanted to ubiquitous with the home computer.
AOL continued to send their discs in the mail. The whole concept of the World Wide Web was pretty mind-blowing — and AOL was the gateway to it.
AOL didn’t stop there. Besides all the mailings, discs were given away with movie rentals, in newspapers and magazines, and at sporting events.
Brandt even started to test freezing the discs to see if they could be given away with Omaha Steaks.
For more than half of the 90s, AOL spent over $300 million just on this marketing campaign that they called “carpet bombing.”
The production was so big that at one point, half of all CDs produced in the world had the AOL logo on them.
How Did This Campaign Pay Off?
Obviously, this paid off pretty well and it’s the reason you've heard of AOL and not other ISPs from the time such as Prodigy.
Before Brandt’s marketing campaign, AOL had around 500,000 members. After the campaign, they were signing up 70,000 new users a month. By August of 1994, they passed a million members.
New subscribers were being logged in every six seconds.
The company had tripled in size in just one year. Then, they doubled just six months later. By May 1996, they were at five million subscribers.
In a Q&A on Quora, AOL co-founder Steve Case discussed their marketing campaign.
Case says how their goal was to spend 10% of a consumer’s lifetime revenue to get a new subscriber.
The average AOL customer was signing on for 25 months spending around $350. AOL would therefore spend $35 on the discs to acquire them.
Then, as the price of the discs went down, they were able to ramp up their marketing.
One example is the delightful movie “You’ve Got Mail” with Tom Hanks and Meg Ryan.
In one of the most flagrant uses of product placement ever seen in a movie, the deal involved millions of dollars to feature AOL as the centerpiece of the Nora Ephron project.
Case shares that when they went public in 1992, they had just 200,000 subscribers. One decade later it was 25 million.
Case explains how this drove up their market capitalization from $70 million when the IPO was launched to an astonishing $150 billion when they combined with Time Warner.
It looks like it wasn’t just Meg Ryan and Tom Hanks’ characters striking up a romance because of that film.
Everyone thought Jan Brandt was crazy to give away the product for free.
She had the foresight to not only see how the internet was changing the world, but how it would impact people on a personal level.
Brandt also knew how good their product was. She knew once it got into people’s hands they would love it.
Brandt took a common marketing practice — direct mail — and used it to promote a new, modern technology.
The story of Jan Brandt and AOL is an amazing example of having the vision to combine two different worlds — direct mail marketing and the internet — and turn it into a massive success.