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AOL, Sears to team in cross-marketing effort

The online giant and the retailer say they will team in a joint marketing alliance and will develop a version of AOL's software for Sears' customers.

! -- EDS update 11:05 am; ADDS 2 grafs to ADD additional information, other deals. --> Online giant America Online and retailer Sears, Roebuck and Co. today said they will team in a joint marketing alliance and will develop a version of AOL's software for Sears' customers.

Under the agreement, AOL products and services will be marketed to Sears customers nationwide. Simultaneously, Sears merchandise will be marketed to AOL members as well as to visitors of its Web sites. Financial terms of the deal were not disclosed.

In addition, the more than 39 million holders of Sears cards will be able to use the cards to pay their monthly AOL subscriptions. AOL plans to develop an online service for Sears customers in the second half of the year that will include real-time communication with Sears customer service, special Sears offers and links to Sears sites. The specially branded edition of AOL with links to Sears will be developed and promoted to the retailer's customers and in dedicated locations in Sears' 858 store locations nationwide.

The two companies also plan to market and sell broadband access and will team to market electronic devices that can access the Internet. AOL and Sears said they will also work together to develop broadband home improvement content and broadband installation and service.

The announcement is the latest in a flurry of e-commerce-related news from Sears in recent weeks. The retailer last month teamed with database software company Oracle and French retailer Carrefour to build an online marketplace serving the retail industry. Sears has also bolstered its consumer retail Web site with additional content and services.

There have been a number of deals recently between major Internet companies teaming with brick-and-mortar retailers as they reach out to the majority of consumers who aren't currently connected to the Net. For mainstream retailers, the deals represent an opportunity to promote their businesses to Internet consumers and to jumpstart their own Web stores.

AOL, for instance, signed a similar agreement with Sears rival Wal-Mart in December. Yahoo and Softbank Venture Capital have an agreement with Kmart to create a co-branded free Internet access service, and Microsoft cut a deal last year with Tandy-owned Radio Shack and Best Buy to promote its MSN Internet service.