AOL Picks Generals to Lead Its Brand Fleet

New hires and promotions aim to grab more ad revenue from a multifront strategy.
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It's no secret that America Online (AOL) wants to be a one-stop shop for marketers who want to reach consumers online.

But now through a series of recent high-profile hires and executive promotions, AOL is gearing up to sell advertisers on more of its online brands -- not just the flagship AOL service, but also properties such as

CompuServe

, local guides

Digital City

and instant messaging

ICQ

.

These new brand executives -- who will play a role akin to that of magazine publishers -- include Paul Atkinson, who left his position as vice president of advertising at

The Wall Street Journal

for AOL two months ago. Atkinson will be the point man for the AOL service, the

AOL.com

Web site and the AOL Instant Messenger service. Other members of this new team, which hasn't been publicly announced, include Ron Bernstein, a veteran of

GeoCities

and

Hachette Filipacchi New Media

, assigned to CompuServe; and AOL insiders Mike Minigan, temporarily at

Netscape Netcenter

, and Steve Silberberg, at ICQ. Other members will represent AOL's Digital City local properties,

AOL MovieFone

and the new

Spinner Networks

and

NullSoft

music properties.

The new structure, initiated by President and COO Bob Pittman, will take responsibility for working with sales and account services personnel. "What it gives us is a lot more efficiency as we go to market," says Myer Berlow, AOL's interactive marketing chief.

AOL's self-styled multibrand strategy is to save costs by using a common infrastructure to run several services, while targeting each service at a different segment of the Internet population -- for example, AOL at the mass market and the ICQ instant-messaging service at a youth-oriented, international audience.

For example, within the next few weeks, the group will be meeting to work out a music strategy and find out "what is the best opportunity for each" brand, Berlow says.

The strategy is key to AOL's future, outsiders says. "Multibrand deals are important because they enable advertisers to take advantage of the combined reach for all of AOL's properties," says Jordan Rohan, online and traditional-media analyst at

Wit Capital

. "This could enable advertisers to do one-stop shopping for its media placement and increase AOL's share of the online advertising market." Rohan has a buy on the stock; Wit Capital has no banking relationship with AOL.

The new appointments signal that AOL is adapting to its size as it grows and focuses on advertising and commerce revenue. "I think it's just part of the whole evolution of the company," says Alan Loewenstein, co-portfolio manager of

(NTTFX)

John Hancock Global Technology fund, an AOL shareholder.

In another sign that the company is evolving, Berlow and David Colburn, a behind-the-scenes dealmaker, have both been promoted from senior vice presidents to presidents of their respective units. Both executives will continue to report to Pittman.

Since becoming head of AOL's interactive marketing group in 1996, Berlow has seen his group grow from a staff that could be counted on two hands to an operation that numbers nearly 400. As AOL's subscription fees have risen, so has revenue from Berlow's unit. In the latest fiscal year ended June 30, advertising, e-commerce and other revenue amounted to $1 billion, compared with $102 million three years ago when Berlow came on board. (Revenue figures from 1999 include results for recently acquired

Netscape Communications

.) Recent major deals include those with consumer-product giant

Unilever

(UN) - Get Report

, greeting-card company,

American Greetings

(AM) - Get Report

and online auctioneer

eBay

(EBAY) - Get Report

.

The smaller business affairs unit, which Colburn heads, has also been active -- forging relationships that include marketing agreements giving AOL real estate on

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HWP)

computers. The unit has also struck deals to make AOL available through high-speed phone lines from telephone companies such as

Bell Atlantic

(BEL)

and

SBC Communications

(SBC)

, and it has acquired companies such as Spinner Networks. (Colburn received his share of media attention recently after his testimony in the

Microsoft

(MSFT) - Get Report

antitrust trial.)

Colburn and Berlow join other presidents at AOL, including Barry Schuler, president of the interactive services group, which oversees properties such as Compuserve and Netscape Netcenter, and Ted Leonsis, president of AOL interactive properties, which oversees other properties, including ICQ, Digital City and AOL MovieFone.

"Obviously, David and Myer have been de facto chiefs of their activities for a long time," says Peter Krasilovsky, a program director of the

Kelsey Group

consulting firm in Princeton, N.J. "It's just become apparent that they should be seen as more than operating officers -- that they should own their respective divisions." AOL isn't a client of the Kelsey Group.

The move is one of the measures that online companies like AOL can take to keep the loyalty of upper management, who may require incentives other than money to stay at the company. "Bigger titles, more authority, clearer prestige in the world of interactivity -- these things help," Krasilovsky says.