AOL courts teen green with Red

The giant Internet service provider (ISP) is increasingly targeting specific segments of its user audience with customized versions of its products as it struggles to add new subscribers and prevent consumer defections. AOL reported a U.S. subscriber base of 24.3 million at the end of 2003, indicating a loss of roughly 2.2 million users over the course of the year.

And while the company remains intent on making up for the falloff with more expensive broadband services, it is aggressively tailoring its products to address different customer segments. Over the last year AOL has released customized services aimed at younger children and Latinos. The company also recently launched a low-cost ISP service under its Netscape brand.

In addressing the teen market, the stakes for AOL may be even higher than in marketing to the audiences that the company has previously targeted. Young adults not only make up an important wave of potential future subscribers, but also stand as a demographic group among the most attractive to advertisers, another key to AOL's success.

The teen package, dubbed Red, targets users aged 13 to 19 with a range of personalized content, including an AOL start-up page designed for teens, and the ability to customize the look and feel of desktop settings for the company's services. In addition to letting users select the streams of news and content delivered via their accounts, Red features a customizable toolbar that allows teens to coordinate AOL's services to their liking. Red also adds unique Buddy List functions for the company's instant messaging (IM) software, known to be a popular medium among teens for communicating via the Web.

The new service highlights areas of AOL's general environment that the company has found to be popular with the age group, including sections devoted to games, movies, music and sports, and further tailors these sections for teens. As part of the Red launch, AOL also increased the number of teen-focused Web chat rooms and message boards that it hosts, and created an e-commerce system called My Plastic, which allows teens to shop online using prepaid accounts.

The parent factor
Malcolm Bird, general manager of AOL's Kids and Teens unit, said his company is well aware of just how important today's teenagers are to tomorrow's profits, and also pointed out that keeping parents happy remains a cornerstone of successfully marketing to the segment.

"Teenagers are an age group who are incredibly important to the retention of subscribers and the acquisition of new members, and they're very discriminating in what they like," said Bird. "What they really want is control: control of their music, movies, television and of course the Web. The teens we talked to were clear that they wanted control of their own Internet services, not their parent's AOL."

However, Bird said that in giving teens some level of online freedom, it also remains important to factor in parental controls that would give AOL subscribers the ability to adjust their accounts based on their children's ages. For instance, Red features two separate areas--for users aged 13 to 15 years old, and 16 and older--to address the various stages of maturation within the larger teen audience. The different levels can only be accessed by entering specific screen names and passwords set up by adults.

The Red-enabled accounts remain administered via parents' so-called master accounts through which adult subscribers can control the boundaries of what their children view, or who they communicate with online, through a number of tools. Among those functions are AOL Guardian, which allows parents to review their teen's online activities through e-mail reports, and capabilities to preset e-mail, IM preferences and Web site access, as well as a timer that can be used to limit how long Red users remain online.

In piloting the program with teen users, Bird said the company actually found that older teens had a greater understanding of why many of their parents continue to demand some level of control over Internet usage.

"Younger teens tend to question why their parents want to control what they do online, but the older kids have a greater understanding of everything that is out there, and why their parents remain involved," said Bird. "One of the things we really tried to build into Red was a system of controlled freedom, where teens can have their own world, but where there are sufficient controls and supervision."

Red is being offered free of charge to customers who have moved to AOL's 9.0 Optimized, the latest version of the company's online client software.