AOL promos still popping up

Last year, America Online told annoyed members that it would phase out third-party pop-up ads--but it didn't mention they'd be replaced by in-house pop-ups.

Jim Hu Staff Writer, CNET News.com
Jim Hu
covers home broadband services and the Net's portal giants.
Jim Hu
3 min read
Last October, America Online declared it would phase out its longtime practice of serving third-party pop-up advertisements, a bid to win back the hearts of its members.

What AOL didn't tell members was that it would increase the number of in-house pop-ups instead.

"I really want it to stop," said Sean Bradley, a computer programmer from Washington, D.C., who, despite opting out of receiving third-party pop-ups, noticed a greater volume of ads beginning in the late fall.

AOL's "marketing preferences" area lets members opt out of receiving pop-ups, but does not block against in-house pop-ups pitching new services from AOL. For members who opted out, the influx of in-house ads has been frustrating.

"When I want to close this software, a pop-up pops up, and it won't close for another minute or two unless I click on the 'No, thanks,'" Bradley added.

AOL spokesman Andrew Weinstein confirmed that members of the flagship online service have received an increased amount of internal pop-ups. He said the influx occurred shortly after the company launched its latest AOL 8.0 service, when it wanted to inform members about new features such as call alerts and promotions for its broadband service.

"There have been more AOL pop-ups than there have been in the past. But if you opt out of pop-ups, there will be significant reduction in internal pop-ups and always no third-party or merchandise pop-ups," he said.

Weinstein said AOL has stood firm on its promise to phase out its third-party and merchandise pop-ups. But that involves honoring advertising commitments struck prior to the decision. He said AOL has eliminated the "vast majority" of third-party pop-ups, and will reduce all pop-ups by the end of this month.

The situation comes at a critical point for AOL. The world's largest Internet service, with 35 million members, has seen its rocketing subscriber numbers stall over the past year. Part of the stall comes from a saturated market for dial-up Internet access.

But more troubling for AOL are signs that dial-up subscribers are leaving for high-speed broadband access or switching to low-cost Internet service providers. This quandary has bedeviled AOL and its closest rivals MSN and EarthLink. Microsoft last month said it will pull back on growing its dial-up business and focus more on developing a broadband service.

AOL is also trying to stop its dial-up subscribers from defecting. The first step has been to improve its online service product, which, executives admit, suffered during the boom years when it tapped easy online advertising dollars. The company in October released AOL 8.0 during a splashy event in New York.

At the launch party, Jonathan Miller, the CEO of the AOL unit, told the audience that pop-ups "aren't where we're going to go from here." Miller added that the removal of third-party pop-ups was meant to improve AOL's "member experience." Still, AOL 8.0 is not a drastic departure from previous iterations of the software, as it largely highlights the same features as its predecessors.

The pop-up issue is just the tip of the iceberg for AOL. The online division of AOL Time Warner has been blamed for dragging down its parent company's stock and bringing on federal investigations involving the unit's accounting practices.

Last week, AOL Time Warner reported lackluster fourth-quarter earnings that included steeper declines from the AOL unit. Company executives repeated that the AOL unit's financial performance will be flat for 2003, hampered by a 40 percent to 50 percent decline in its online advertising business.