Q&A with AOL Vice Chairman Ted Leonsis

Ted Leonsis is a pioneer of the new media industry, a professional sports team owner and a philanthropist. He is currently vice chairman of America Online, Inc. and president of AOL's audience-based businesses. He is the longest tenured senior-level AOL executive and has served in multiple leadership capacities during his dozen years with the company.

Leonsis joined America Online, Inc. as it hit 300,000 members and was generating less than $100 million in revenues with 350 employees. Today, the company generates more than $8 billion in sales and has more than 30 million paying customer relationships on a global basis, with 19,000 employees, generating more than $1.8 billion in profit for 2004.

In his present position, Leonsis sets strategy and vision for America Online, Inc.; champions the members' voice for all AOL-related brands; and has direct responsibility for AOL's audience-based businesses -- the division that aggregates audiences and creates products and programming for more than 100 million unique, unduplicated monthly visitors on the AOL, AOL.com, AOL for Broadband, CompuServe, Netscape.com, MovieFone, AIM, ICQ, MapQuest, In-Store and Wal-Mart Connect services. He is also responsible for original content development for America Online, Inc. and all ad sales, commerce and search-related revenue streams, as well as AOL's recent acquisition, Advertising.com.

Leonsis is originally credited with positioning America Online as a media company, inventing the channel programming model for the industry, programming the first original content sites in cyberspace, making more than 25 profitable venture capital investments for the company and acquiring and integrating MovieFone, MapQuest and ICQ for AOL Inc.

Leonsis will present the keynote address, "Not New Media: THE Medium," at September's iMedia Brand Summit in San Diego.

Rebecca Weeks: Long before others recognized it, you forecasted that interactive media would be successful. Did you ever dream it would become what it is today?

Ted Leonsis: Back in the early 1990s, the company I founded -- Redgate -- put out a series of ads/posters. The first was called "New Media, New Rules." The second urged marketers to "Wash Their Minds" of everything they thought they knew about marketing. And the third called out "Digitize… or Die."  So I'm not surprised that interactive media is successful -- it just took a little longer than I expected.

The problem was basically one of bandwidth. We needed broadband to get to the kinds of activity -- music, video and so forth -- and the level of usage and user engagement that would attract the attention of marketers.

Weeks: Money is starting to pour into online, so how can we mature this medium? What do you believe are the barriers that need to be overcome to increase this investment?

Leonsis: As of 2003, the internet already represented 14 percent of all media consumption -- it's probably way above that today. But it's only expected to attract around six percent of all ad spending even by 2007. 

We need to close that gap by getting the word out about the size and level of engagement of online audiences. "Shift happens," and it is happening from traditional media to the online medium today. Not to mention our unique ability to target and deliver the precise audiences that marketers are looking for, with an unprecedented degree of efficiency in terms of cost. 

So a lot of the problem is one of communicating our reach and capabilities. 

Weeks: How do you see "anytime/anywhere" access to digital content impacting consumer lifestyles and the way advertisers try to deliver their messages?

Leonsis: We don't need to look any further than AOL's recent breakthrough with Live 8. We showed that the web can not only stand up to and even outperform any medium, providing unprecedented coverage of a live, global event, but also actually extend the life of that event through on-demand availability.

We put users in control -- letting them choose which events they wanted to watch -- and we provided continued access to hundreds of thousands of users who might not have wanted to sit in front of their TVs on a holiday weekend. Moreover, we have made Live 8 a social event -- we made it possible for users to bring certain aspects of the concerts to the attention of their friends and families and share it together. And as word of mouth spreads in that way, we'll see "viral marketing" of the programming.

On the marketer side, programming like Live 8 provides a terrific environment for consumers. Since it's video, users are more comfortable seeing rich media and video marketing. And it's attracting the audiences that marketers covet, and because of the level of choice and control involved, they are truly interacting -- it's not just turning on a TV and channel-surfing. Unlike TiVo, which consumers can use to black out commercials, we can create campaigns that put marketing directly in front of users as they watch programming and actually engage them.

And marketers are sitting up and taking notice. Following the tremendous media interest in Live 8, we've had a great deal of response from brand advertisers who want to be in on this phenomenon. We're looking forward to following up with more great live programming that will provide a great environment for marketers.

Weeks: What is the future of content online? What are some of the newer forms of content delivery that you see taking hold in the industry, and what are the implications to marketers? How is this medium evolving? How will content formats evolve?

Leonsis: The great news about content online is that it will continue to proliferate and become more and more personalized and user-generated. Real Simple Syndication -- RSS -- is allowing everyone to become an editor; blogging and the ease of producing audio and video content are allowing everyone to become a publisher or performer. 

Plus, as search becomes more and more powerful, it becomes both a form and an enabler of content. It will allow users to locate and download the information and entertainment they are looking for -- both produced and user-generated. Already, the web's versatility and capabilities are making it the hub for music and video entertainment, both live and recorded, video and audio, connected to home entertainment systems. Thirty-seven million Americans listen to online radio each month, and 35 million Americans watch online video each month -- that represents explosive growth in each category in the last couple of years.

Of course, content goes beyond entertainment. The internet will be a source for information on all kinds of life management. Categories where we are seeing increasing interest include home and garden and in particular, education.

And the medium goes not only beyond the PC but beyond the home. One place we're just beginning to scratch the surface is wireless. As wireless devices gain more and more capabilities, we're going to see them used not only for voice and data applications but increasingly for music, games and videos. Already, certain phones are downloading sports and other video programming, and it will soon be as ubiquitous as picture phones are today.

What all this means for marketers is that there will be more and more environments for them to reach consumers, and more and more opportunities to involve consumers in reaching other consumers. Tim Smith of Intelevision said it best last year: the best brands will be the ones whose consumers tell the best stories online.

Weeks: What are the opportunities for marketers in the post button and banner online world?

Leonsis: The real opportunity for marketers can be described in one word: performance. CPM, CPC and CPA are coming together, and it's no longer about the form of marketing or the sheer number of impressions -- it's about results. The medium can now target ads based on response data including behavior, geography, time of day, the type of creative and more. We can instantly know what's working and make adjustments. And with increased bandwidth and the explosion in rich media, we can provide more creative approaches that capture attention and engage users.

Advertisers no longer have to echo the lament attributed to F.W. Woolworth -- "I know that half of my advertising budget is wasted. The problem is that I don't know which half." None of your marketing budget has to be wasted. It can go where you want it to go and achieve the results you want it to achieve.

Weeks: What's the best advice you can give a marketer for success in today's marketplace?

Leonsis: I would tell a marketer to stop thinking about the web as "new media." It's now the medium. Instead of making the interactive medium an add-on in your marketing spend, make us the first stop -- and spend the leftovers on the old media.

Rebecca Weeks is content director for iMedia Summits.

 
 

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