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AOL to advertise on welcome screen

America Online plans to sell advertising on the home page for its subscribers and on its "sign off" screen in an attempt to revive its crumbling online advertising business.

America Online plans to sell advertising on its "welcome" and "sign off" screens in an attempt to revive its crumbling online advertising business.

The Internet division of media giant AOL Time Warner confirmed that it will serve advertisements on a corner of its welcome screen, the home page for its subscribers. AOL also plans to advertise on its sign-off screen, which is the last screen subscribers see when they log off the flagship proprietary service. These ads will be bolder than the welcome screen's and take up the entire window with promotional images.

The welcome screen ads have appeared intermittently on AOL for the past three to four weeks, but will become permanent in March, according to an AOL spokeswoman. The sign-off ads will make their way onto the service in the next six to eight weeks, she added.

The new ads are appearing amid a collapse in online advertising revenue for once-mighty AOL. The company said in December that it expects online advertising revenue to plummet 40 percent to 50 percent in 2003. AOL in January also reported its first subscriber base decline in recent history; high subscriber numbers were long considered to be the division's cushion during the advertising recession.

AOL is in the process of recovering from a year pockmarked by advertising losses and the growing threat of subscriber defections to broadband. Division executives have highlighted product development and consumer satisfaction as key to luring customers back to its proprietary service.

The biggest shift so far has been AOL's decision to discontinue third-party pop-up advertisements. At the time, executives said the policy shift, announced in October, was meant to boost member satisfaction. However, AOL still increased the number of in-house ads in the subsequent months.

Allowing advertisers to buy its most valuable real estate underscores the new boundaries that AOL is pushing to balance revenue generation and user satisfaction. AOL has pledged it will work more closely with advertisers to revamp its business, and this move marks the company's acknowledgment of its new thinking.

"Advertisers have been clamoring for ads on the welcome screen for some time, and now we are in a position to deliver that--along with other desirable and well-trafficked units--without infringing on the member experience," Lon Otremba, executive vice president of AOL interactive marketing, said in a statement. "In fact, we've found that appropriate, well-positioned advertising can even enhance the member experience."