If you weren’t in diapers in the 1990s, odds are you remember seeing AOL trial discs on a regular basis. How much did it cost AOL to bombard mailboxes with those CDs for so long? As TechCrunch reports, AOL co-founder and former CEO Steve Case answered that question on Quora.com recently. The answer, in his words, is "a lot:"
I don’t remember the total spending but do recall in the early 1990s our target was to spend 10% of lifetime revenue to get a new subscriber. At that time I believe the average subscriber life was about 25 months and revenue was about $350 so we spent about $35 to acquire subscribers.
Former AOL Chief Marketing Officer Jan Brandt chimed in yesterday afternoon with more precise numbers:
Over $300 million 🙂 At one point, 50% of the CD’s produced worldwide had an AOL logo on it. We were logging in new subscribers at the rate of one every six seconds.
Yikes! Of course, the "carpet bombing" strategy did work. Case points out that AOL went from fewer than 200,000 subscribers in 1992 to around 25 million in 2002, bumping the company’s market capitalization from $70 million to a mind-boggling $150 billion. Things didn’t exactly pan out in the post-dialup era, though, and neither did the merger with Time Warner. (You might recall Time Warner spun off AOL just over a year ago.)