MSN Prepares for a $50 Million Battle

MSN, the online portal and Internet service provider operated by software giant Microsoft, is launching an ambitious $50 million ad campaign to take on America Online.

The move takes advantage of a recently announced price increase by AOL that MSN reckons has left some subscribers disillusioned and more willing to try a new service. It also moves MSN away from its previous strategy of purely branding its offerings.

The campaign launches later this week in national newspapers and will last six to eight months. It eventually will spread to magazines, television, direct mail, and online, even outside of MSN placements.

"We've built the brand up to a point where we can do an aggressive campaign that is more acquisition oriented," says Bob Visse, group product manager for MSN. While he declines to release the creative details of the advertisements, Visse says the campaign would aggressively target MSN's competition.

"We'll be a lot more direct and this campaign will name names," Visse says. Although Microsoft plans on spending 60 percent to 70 percent of the campaign funding on TV ads, the spots won't air for at least several months.

MSN's campaign could be reminiscent of the long-distance marketing wars, which have raged for years and pit one carrier against another. It likely portends a huge round of spending increases in a category that already spends hundred of millions a year.

Making MSN's decision for a competitive push easier was AOL's recent decision to raise rates. Last week, AOL, which has 29 million subscribers worldwide, said it would increase monthly fees for unlimited use by $1.95, to $23.90, beginning this summer.

A cornerstone of MSN's new campaign is a promotional offer that MSN's monthly rate will not change until January 1, 2003. MSN, which has 5 million subscribers, also is offering three free months of service to AOL customers who switch.