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A Conversation with AOL's Ted Leonsis

Dawn Anfuso
A Conversation with AOL's Ted Leonsis Dawn Anfuso

As the boats sailed gracefully in the background at San Diego's Lowe's Coronado Bay Resort on Monday morning, Ted Leonsis told a packed auditorium of iMedia Brand Summit attendees how online media now has wind in its sail.

Leonsis is the longest tenured senior-level executive at America Online, Inc. He has served in multiple leadership capacities during his dozen years with the company, currently holding the title of vice chairman/president of AOL Audience Business. He is originally credited with positioning AOL as a media company, inventing the channel programming model for the industry, programming the first original content sites in cyberspace, making more than 25 venture capital investments for the company, and acquiring and integrating MovieFone, MapQuest and ICQ for AOL.

In a conversation titled "Not New Media: THE Medium" led by iMedia's Neil Perry, Leonsis described the importance online has gained in our society. When Perry asked him about a rumored AOL/MSN merger, he springboarded off the question (which he said he couldn't answer) to explain that such talk only propagates the fact that online is here to stay, is growing, and in fact represents a higher calling than all media before it.

"I'm still deeply, passionately in love with the internet," he told Perry, who reminded Leonsis of an ad he ran in early internet years that marketers would need to "digitize or die." "Back in 1988, I said that everything was about to change with the way consumers interacted with media. We've now reached that point. And within five years, the major media companies will all be internet companies."

Ask anyone under 50 if they would choose to have a TV, a phone or the internet if stuck on an island, he said, and everyone will pick the net. "It has become part and parcel of our daily lives."

He further illustrated the influence of the net through two AOL case studies: how it helped mobilize people after Katrina struck the Gulf States, generating donations of over 12 million dollars in relief; and how it provided worldwide viewers a better way to participate in Live 8. Approximately five million people, about the same as a cable channel audience, watched the event live online, and another 25 million additional streams were viewed in the first week.

The Live 8 example shows how consumers want to be able to time shift and control their experiences. This newfound empowerment isn't going away, said Leonsis, so marketers must find creative, scalable ways to live with it and build relationships with consumers on their terms. When Time Warner first bought AOL, for example, the movie companies feared a proliferation of illegal DVD copying and an end to the DVD market. What happened instead is that the DVD market today is bigger than ever, with movies serving as long-form commercials for DVD sales. "It's about finding new streams of revenue from technology," Leonsis said.

It's also about surrendering yourself to your consumer base, letting them market for you, he said, addressing a question from Perry about the trend toward viral marketing. Although viral marketing isn't exactly a tactic a marketer can employ, they certainly can stimulate it by understanding their customers and providing them with a product or service they embrace as theirs to share.

There's still further the medium can go toward serving customers' needs though, said Leonsis. "We have the tools and the bandwidth; our job is to bring the medium to the next step," which he describes as putting the steering wheel in consumers' hands. He shared a scenario in which, although he had seen hundreds of Michelin commercials during televised sporting events, when he had a flat on his Mercedes, he had to get out his phone book and call five or six tire dealers to find what he needed and price it out. "The brand that figures out how to do all the work for me, is the one that wins," he said.

To move to the next step, Leonsis says the industry has to take the risk out of the internet buy for marketers by embracing cost-per-acquisition. He said we'll really see the shift in dollars when CPA becomes the standard.

Having younger people who grew up with the net in upper management positions will help, too.

As for the next generation of online marketing executives, Leonsis insists we'll need mathematicians to implement accountability and optimize results.

Stay tuned tomorrow for more iMedia Brand Summit coverage.

Dawn Anfuso is editor of iMedia Connection.



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