AOL Pumps Up CompuServe With Co-Branding Deals

In a deal that industry observers see as part of an all-out effort by America Online to rapidly grow a struggling subsidiary’s subscriber base, CompuServe will now be teamed up with AAA to deliver co-branded Internet service to AAA’s 38 million U.S. members.

While the specific financial terms of the deal were not disclosed, the agreement will begin as a pilot program in local clubs. A full U.S. rollout is scheduled for mid-2000.

For its part in the bargain, AAA, the largest provider of leisure travel and emergency road services in North America, will get a chance to pitch discounted memberships to CompuServe 2 million subscribers.

The Rebirth Of CompuServe?

Since AOL acquired CompuServe in early 1998, its primary goal has been to pump up its subscriber base. In the U.K and Germany, CompuServe has gone head-to-head with local online service and won. With AOL’s strong financial backing, CompuServe’s European subscriber base has soared to more than 850,000.

CompuServe has also snagged 300,000 new members in the U.S. with the help of AOL’s recent guerrilla marketing tactics. These measures include rebate programs with eMachines, CompUSA and Apple. Under the programs, AOL rebates $400 (US$) to every customer who purchases a computer and agrees to sign up for 3 years of CompuServe.

The program has been so successful that, over the last two weeks, giant direct computer sellers such as Dell Corp. and Gateway have announced that they are now offering similar rebates.

Tailored Service

AAA’s co-branded service will consist of a customized version of the CompuServe Main Menu and will include branding for each local club that elects to participate.

“AAA has had a tremendous history of marketing products affiliated with its quality brand name, and we are delighted to extend that success by teaming up together,” said Audrey Weil, CompuServe’s general manager. “CompuServe has the unique ability to tailor its service to the specific needs of each U.S. club to provide not only information on travel, insurance, financial and auto-related services, but access to all the Internet and features of CompuServe 2000.”

Multiple Co-Branding

Another co-branding deal that has recently been closed is a new version of CompuServe’s online service designed for pilots and flight personnel of Continental Airlines.

With the specialized program, on-the-move airline employees can gain access to flight schedule information and book their work schedules. As part of its rollout of its new CompuServe 2000, Continental will re-market the online service to its entire workforce.

Additionally, CompuServe has developed customized versions of its service for such heavy hitters as MCI Worldcom, IBM, American Lawyer Media and American International Group.

About CompuServe

CompuServe was founded in 1969 when 25 year-old Jeffrey Wilkins set out to computerize his father-in-law’s insurance agency. In 1977, he introduced MicroNet, a mainframe computer time-sharing network that eventually became one of the first true online services.

H&R Block bought CompuServe in 1980, pumping in the necessary cash needed to aggressively develop online technology.

By 1996, CompuServe announced that its subscriber growth had stalled, sending its stock into a tailspin. Competition from AOL and the Internet contributed to its problems.

In early 1998, AOL — which is the number one online service with 20 million subscribers — stepped up to the plate and purchased the company’s content operations. Meanwhile, MCI WorldCom acquired CompuServe’s network services division.