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
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
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
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
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
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
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