I-RECALL: Spotlight On - Internet Service Providers. Has impenetrable advertising hindered the growth of ISPs? Marketing is not purely to blame for the death of an ISP, Alasdair Reid reveals

If we had any doubts whatsoever, we can now forget them - no-one

wants to be an internet service provider any more. When Sir Richard

Branson - as renowned for his congenital optimism as for his improbable

ballooning accidents - bails out, then you can be certain that the whole

sector is a seriously unhappy place to be.



Last week Branson put his Virgin.net business up for sale following the

collapse of talks with the ISP's minority shareholder, ntl, which had

balked at the asking price. In a proposed deal that would have valued

the company at pounds 240 million, ntl would pay pounds 100 million for

the shares it did not already own and take Virgin.net's 600,000

subscribers, while Virgin would have retained the entertainment and

leisure portal.



But now the entire company is up for sale, and buyers are not expected

to be banging the door down. Virgin.net may claim to be the UK's fifth

largest ISP, but that is hardly a big deal when there are so many

struggling service providers out there. After all, it took United

Business Media and BT more than five months to sell LineOne.



This is astounding when you cast your mind back a few months to when

everyone seemed to be launching an ISP and there were more than a

hundred serious players out there.



There were all sorts of models - free, free and unmetered, and the

old-fashioned variations on a subscription theme. In an industry where

"owning the customer" was deemed to be of paramount importance, then

what better position to occupy than the primary interface with the

consumer?



Clearly the practice hasn't been as potent as the theory. But has the

ISP business also been poorly served by the advertising industry? Is one

of its problems the inability of marketers to create credible long-term

brands?



The case for the prosecution might include work for one of the most

spectacular ISP casualties, Breathe. The ads were beautifully crafted,

haunting and slightly surreal but consumers didn't know what they were

selling. Was this product free? How did you get it? The advertising

conveyed such an aura of unapologetic impenetrability that you felt the

client itself didn't care. Or wanted you to regard such questions as

banal and crushingly suburban. And we could also call as evidence those

laboured "we can let you be what you want to be" ads from Freeserve

featuring Aimee Mullins, the athlete and model who lost her legs when

she was a year old.



It's a million miles from the direction taken by the likes of AOL. AOL's

advertising featuring the irrepressible Connie is despised within the

creative departments of ad agencies. This is clearly the internet for

idiots. And it is unremittingly suburban. But, after all, this is where

the real revolution will take place and where the serious money will be

found.



Nigel Sheldon, the managing partner of mdigital, the interactive unit of

MindShare, says: "AOL has been successful in maintaining its core

proposition in the face of all the changes that we've seen in the past

year or so.



They have a lot of things going for them. They have the experience,

having been in right at the start in the US market. They have the scale

and the media owner tie-up and they have the methods of distribution.

You can argue that others had that or bits of that. Freeserve had a

wonderful distribution vehicle through Dixons. I don't think anyone can

be definitive as to what the business model should be. But AOL has put

it all together."



However, a source close to Virgin.net's marketing efforts insists you

should look more closely at what AOL has actually achieved. He says:

"You can argue that AOL's marketing has helped it outperform the market

but then if you start thinking about return on investment, then you

might have cause for thought. They've thrown a serious amount of money

at this.



Some in the market have managed to build significant customer bases

without doing that. But the market has suffered the after-effects of

periods of confusion both in terms of product development and marketing.

It didn't help when unmetered ISPs launched and then became

oversubscribed."



But what of the future? Yahuda Shapiro, a marketing consultant

specialising in the e-commerce sector, says that ISPs, like the rest of

the dotcom sector, have not only realised that they are not exempt from

business basics but they've also learned not to underestimate the

consumer. "The internet very quickly became as commonplace as the

telephone and people were more savvy than some gave them credit for.

Content is not as important as the deals on offer," he states.



But Shapiro argues that the marketing community shouldn't be too hard on

itself. He says: "I think dotcoms in general were made scapegoats for

pretentious advertising. But on the other hand, it's true that because

of the very fact that they're not established products, you do have to

do more to explain them. The principle always should be that it's better

to have the nuts and bolts with a bit of sex added than sex with no nuts

and bolts. And I think the relationship between internet companies such

as ISPs and their agencies was, and is, good. The agency doesn't just do

what the client wants and the client doesn't just accept what the agency

tells it. There has been a truly collaborative atmosphere. So, no -

whatever problems ISPs have had can't fairly be laid at the door of

advertising agencies."



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