MSN Launches Anti-AOL Campaign

Seizing the opportunity offered by America Online's rate hike last week, Microsoft is throwing $50 million behind ads that encourage users to switch.

by Christopher Saunders of internetnews.com [May 30, 2001]

Microsoft Corp.'s MSN is targeting the users of AOL Time Warner's rival online service with a new advertising campaign, designed to lure away subscribers with promises of savings.

The new effort seizes a window of opportunity opened by AOL Time Warner's rate hike for its America Online unit, which last Tuesday increased the monthly charge for unlimited Internet access by $1.95, up from the $21.95 it has charged for the previous three years.

Now, with a $50 million ad campaign and promotion, MSN aims to capitalize on the smaller price tag for its online service (it still charges $21.95 a month for access) and additionally, is offering guarantees that the rate will remain unchanged until 2003, for new users and converts.

Additionally, MSN is incentivising AOL users who switch over to the service with three free months of service.

"Immediately following AOL's price hike last week, we received thousands of calls from AOL customers looking for an alternative," said Yusuf Mehdi, vice president of MSN and the Personal Services Business Group at Microsoft. "While we understand the business need to periodically raise rates, we are providing a special offer for those consumers who are looking for a premium service at an attractive price."

The "switcher" campaign is the first of its sort from MSN, which has run several campaigns to date that focused on building brand awareness for the Web portal/online service. In October, the service debuted a $150 million campaign centering around a series of slow-motion, dreamy television promoting MSN's features and new Internet Explorer browser.

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